Suppose the Market for Oranges Is Perfectly Competitive and Unregulated

question 30

Multiple Choice

Suppose the market for oranges is perfectly competitive and unregulated.Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges.Suppose Q_D = 1000 - 100P and Q_S = -100 + 100P.The tax that would have to exist to achieve the socially optimal level of production would be

• A)$0
• B)$.50
• C)$1
• D)$2

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