Microeconomics: Principles, Applications, and Tools (8th Edition)

by O'Sullivan, Arthur; Sheffrin, Steven; Perez, Stephen

Published by Prentice Hall

ISBN 10: 0-13294-886-9

ISBN 13: 978-0-13294-886-9

Chapter 16 - External Costs and Environmental Policy - Exercises - 16.2 Taxing Pollution - Page 373: 2.8b

Answer

\$2.34 and 83

Work Step by Step

Initial price: \$2 Carbon tax shift: \$0.34 (17%) new price: \$2.34 initial quantity: 100 million gallons Carbon Tax shift: 17 million gallons (17%) New quantity: 83 million gallons

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