What tax t should you set to achieve the social optimum

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Bee keepers in your state have been complaining that the cherry orchard owners are killing bees when they spray cherry trees for pests. you estimate that the private marginal benefit your residents enjoy from cherry consumption is PMB=306-4Q and the private marginal cost of cherry production is PMC=4Q where Q is pounds of cherries. Using data from the bee keepers, you calculate that the marginal external damage to their livelihood associated with cherry production is MD=20+2Q.

1) what tax T should you set to achieve the social optimum?

Reference no: EM13998448

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