How can a corrective tax achieve efficiency

Reference no: EM13207358

The supply of paper is described by the following equation Qs= 5000 P..... where Qs is tons supplied per year and P is price per ton. demand is Qd= 400,000-1000 P... there Qd is tons demanded per year. because of the pollution associated with paper production, the marginal cost of $20.00 are associated with each ton of paper. Assuming paper is sold in a competitive market, what is the market price? how many tons of paper will be produced per year at that price? what is the efficient annual output of paper? how can a corrective tax achieve efficiency?

Reference no: EM13207358

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