What is the socially conscious solution

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The EPA determined the presence of a public health and ecological damage externality cost in dollars of MEC=0.02Q associated with Q units of nitrogen oxides output of a chemical process per month. There was no evidence of external benefit. The marginal social benefit was estimated as MSB=50-0.4Q and the marginal social cost as MSC=2+ 0.4Q

What is the competitive solution?

What is the socially conscious solution?

If you start with the competitive solution (Q=?) and you want to assess a Pigouvian tax equal to the externality, how much would that tax be?

Theoretically, What other policy alternatives to the Pigouvian tax exist? Which alternative do you prefer? Why?

Reference no: EM131424901

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