Final answer:
A government can use a tax on dry cleaning to incentivize dry cleaners to reduce pollution levels. The value of the tax should reflect the cost of pollution and encourage sustainability. The deadweight loss from excessive dry cleaning can be calculated based on the difference between the socially optimal quantity and the actual quantity produced.
Step-by-step explanation:
A government can use a tax on dry cleaning to bring about the efficient level of production by making it more expensive for dry cleaners to pollute the environment. By imposing a tax on dry cleaning, the government can incentivize dry cleaners to reduce their pollution levels. The value of the tax should be set at a level that reflects the cost of the pollution and encourages dry cleaners to adopt cleaner and more sustainable practices.
The deadweight loss from excessive dry cleaning can be calculated by looking at the difference between the socially optimal level of production and the actual level of production. In the graph, the deadweight loss would be the area between the socially optimal quantity and the quantity produced at the current market price. The dollar value of the deadweight loss can be determined by multiplying the quantity of excess production by the difference in price between the market price and the socially optimal price.