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Economics - Financial Markets
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I'm in a college economics class and I'm really struggling. Can someone please explain MPC = Supply MSC>MPC MSC = Supply + Spillover cost Without intervention market determines output at *q With intervention, socially desirable output at Qs. CORRECTING FOR NEGATIVE EXTERNALITIES Since MSC>MPC, the solution is to raise the MPC Tax the product Tax = Ps-Pt Ps=Social optimal price Pt= MPC at Qs Tax revenues from the tax =per unit tax Qs=Number of Units taxed Tax Revenues=Qs (Ps-Pt) Thank you so much!
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