Question: Please help with this practice question. Thank you. A local paper producing factory increases air pollution in the local area so that the social costs
Please help with this practice question. Thank you.


A local paper producing factory increases air pollution in the local area so that the social costs of production are higher than the private costs. The following table shows the private value, private cost, and social cost of paper produced by this local factory. Private Private Social uanti Q ty Value Cost Cost 100 $2000 $500 $800 200 $1800 $600 $900 300 $1500 $700 $1000 400 $1400 $800 $1100 500 $1200 $900 $1200 600 $1000 $1000 $1300 700 $800 $1100 $1400 800 $600 $1200 $1500 900 $400 $1300 $1600 The socially optimal level of output is units of paper, but if left unregulated the factory will instead produce units of paper. (Use the table above from Question 5.) How large would the per-unit tax on paper need to be, in order to induce the paper factory to produce the socially optimal level of paper? (Hint: Table shows value and costs per 100 units and questions asks for tax for 1 unit.) (Write answer without the dollar Sign.)
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