Answer to Question #59621 in Microeconomics for ali
Pollution. Determine the amount of pollution after the tax.
D: P = 2,400 - 2Q
S: P = 400+ 2Q
Poll.: P = 80
If demand and supply functions for pollution are: D: P = 1,400 - 2Q S: P = 200 + 2Q In equilibrium Qd = Qs, so: 1400 - 2Q = 200 + 2Q, 4Q = 1200, Q = 300 units. P = 1400 - 2*300 = $800. If the price of pollution is P = $80 and Q = 300 units, then the social welfare loss before the tax is SWL = P*Q = 80*300 = $24,000.
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