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The private marginal benefit for commodity X is given by 50-5X, where X is the number of units consumed. The private marginal cost of producing X is constant at $10. For each unit of X produced, an external benefit of $5 is imposed on members of society.
What type of externality is being described? In the absence of any government intervention, how much X is produced? What is the social efficient level of production of X? What is the gain to society involved in moving from the inefficient to the social efficient level of production? Suggest an approach that the government could take that could lead to the efficient level. How much would such an approach cost or benefit government in the form of increased government tax revenues or increased government costs?
Need help answering this question if full. There is already and answer available in Course Hero but it does not answer every question and also I do not need any charts. Just the correct equations and answers for all of the questions asked.
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