Question

Or An Industry With MAC = 180 – 2E And MDC = 4E, The Socially Efficient Tax Is Equal To ________. A. $30 B. $120 C. $90 D. $360

Answer 1

The socially efficient tax for the industry can be calculated by equating the MAC and MDC. The equilibrium quantity E is found by solving the equation 180 - 2E = 4E. The socially efficient tax is $120.

Step-by-step explanation:

The socially efficient tax for an industry can be calculated by equating the marginal abatement cost (MAC) to the marginal damage cost (MDC). In this case, the MAC is given by the equation MAC = 180 - 2E and the MDC is given by MDC = 4E. To find the socially efficient tax, we need to find the value of E at the equilibrium where MAC equals MDC.

Equating MAC and MDC:

180 - 2E = 4E

180 = 6E

E = 30

Substituting the value of E back into the MAC equation:

MAC = 180 - 2(30) = 120

Therefore, the socially efficient tax is $120 (option B).

Answer 2

The socially efficient tax for an industry with a given demand and supply equation is $30.

Step-by-step explanation:

The socially efficient tax is determined by setting the marginal social benefit (MSB) equal to the marginal social cost (MSC). In this case, the MSB is given by 180 - 2E and the MSC is 4E. Setting MSB = MSC:

180 - 2E = 4E

180 = 6E

E = 30

The equilibrium quantity (E) is equal to 30, so the socially efficient tax is $30 (option A).