Question: Chapter Summary and Problems 135 a. Explain how a government can use a tax on dry clean- ing to bring about the efficient level of

Chapter Summary and Problems 135 a. Explain how a government can use a tax on dry clean- ing to bring about the efficient level of production. What should the value of the tax be? b. How large is the deadweight loss (in dollars) from ex- cessive dry cleaning, according to the figure? 5.9 [Related to the Making the Connection on page 121] Draw a graph for the market for sweetened soda and as- sume that consumption of sweetened soda causes a nega- tive externality by raising medical costs. Draw both the actual demand curve representing the marginal private benefits and the demand curve representing the marginal social benefit. Show the deadweight loss caused by the externality. a. Should the government prohibit consumption of sweet- ened soda if it causes a negative externality by raising medical costs? b. How could the government get drinkers of sweetened soda to incorporate in their consumption decisions the cost they impose by raising medical costs? 5.10 In 2007, Governor Deval Patrick of Massachusetts pro- posed that criminals would have to pay a "safety fee" to the government. The size of the fee would be based on the se- riousness of the crime (that is, the fee would be larger for more serious crimes)
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