Question

# suppose the marignal benfitis and cost per gallon of gasoline in the united states are modeled as follows to

illustrate the negative externaility of gasonline combustions: MSB=12.80 - .42Q MPB=12.80 - .4Q MSC=MPC=1.25 + .02Q Where Q is millions of gallons State the equation that represents the market exertanilty. Give the economic interperation of this equation, using its specific numerical values. Find the efficient equallibirum Pe and Oe for the market. Find the dollar value of a per unit gasonline tax that would achieve the efficient solution and calcualte the tax revenues generated to the government as a result

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