Asked by
Gavriella Hardoon Hodge
on Oct 26, 2024
Verified
When farmers raise hogs,there are a number of external costs.In particular,hogs generate methane gas.If the marginal external cost is $100 per hog and the government imposes a tax of $200 per hog,then at the equilibrium price and quantity of hogs:
A) too few hogs will be raised.
B) the price will be less than the marginal social cost.
C) the price will be less than the marginal social benefit.
D) the price will be less than the marginal cost to hog farmers.
Marginal External Cost
The cost imposed on a third party not involved in a transaction or activity due to an additional unit of production.
Methane Gas
A potent greenhouse gas with a simple chemical formula CH4, commonly produced by the decomposition of organic materials and digestive processes of animals.
- Identify how government interventions (e.g., taxes) can affect market outcomes in the presence of externalities.
Verified Answer
DA
Learning Objectives
- Identify how government interventions (e.g., taxes) can affect market outcomes in the presence of externalities.