Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Economics Posted 27 Jun 2018 My Price 6.00

Used automobile batteries

Used automobile batteries can be a serious environmental problem. When dumped into landfills, batteries can leak lead and contaminate nearby water supplies, a negative externality. To explore this issue, consider the following scenario. A small city has a demand for car batteries given by: P = 200 - (3/1000)Q Please note that this is the ordinary market demand before any consideration of externalities. The supply of batteries is perfectly elastic at $50. However, each new battery eventually will be discarded and will contribute to the contamination of the town's water supply. An economist has estimated that the damages are equal to $3 per new battery (that is, all future damages caused by the battery are equivalent to $3 at the time of purchase).

 

What is the socially efficient number of batteries? Be sure to show your work. Suppose the government wanted to address the problem by imposing a tax on batteries. What should the tax be?

Answers

Maurice Tutor
(5)
Status NEW Posted 27 Jun 2018 10:06 PM My Price 6.00

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