Q4. Assume demand for a good is given by P=40-0.3X, where X is the number of...

 

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Q4. Assume demand for a good is given by P=40-0.3X, where X is the number of units of the good produced. The marginal private cost of producing the good is constant and equal to 10. Production of the good is associated with an external cost and hence marginal social cost of production is MSC=10+0.1X. If we impose a tax of 7.5 on the producer social optimum will be achieved. True/False/Uncertain. Explain. Q4. Assume demand for a good is given by P=40-0.3X, where X is the number of units of the good produced. The marginal private cost of producing the good is constant and equal to 10. Production of the good is associated with an external cost and hence marginal social cost of production is MSC=10+0.1X. If we impose a tax of 7.5 on the producer social optimum will be achieved. True/False/Uncertain. Explain.

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The detailed answer for the above question is provided below Correct answer False To determine if the statement is true false or uncertain we need to ... View the full answer