Question

The government wants to set the socially optimal level of nitrogen runoff, and government regulators believe that the actual marginal benefit of pollution (MBP) is given by the estimated MBP curve. The deadweight loss associated with a quota is _____, w

Answer 1

Hello your question is incomplete attached below is the complete question

Step-by-step explanation:

Dead weight loss = 0.5 [( Δp ) * ( ΔD ) ]

D = DEMAND

P = PRICE

DWL with quota = 0.5 [ ( $10 -$6 ) * (12 - 8 ) ]

= 0.5 ( 4*4 ) = $8

DWL with pigouvian tax = 0.5 [ ($10- $6 )*(9 - 8 ) ]

= 0.5 [ 4 * 1 ] = $2