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Following table represents the marginal social cost and marginal social benet of the odour. The bad smell that is coming from the surroundings near...


Q6 Economics.png



a)    Represent the marginal social benefit curve and the marginal cost curve and determine socially optimal odour.

 

b)    Only few members of the sorority benefit from the music and they bear none of the cost. What is the level of odour they can handle?

 

c)    If Pigouvian tax of $3 per is imposed. From your diagram the odour choosed is?

Q6 Economics.png

Following table represents the marginal social cost and marginal social benefit of the
odour. The bad smell that is coming from the surroundings near you is a negative
externality. Smell Ma 'nal social benefit Ma 'nal social cost 80 81 26 0 82 20 1 83 24 3 84 8 5 85 4 T 86 6 9 83’ 0 1'3

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