# G202 Exam 3 extra credit questions

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Consider a good that generates external damages. A competitive market that is left un-regulated tends to
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Terms in this set (15)
Steve's paper factory is polluting a local river and the following information is provided on its production quantity, demand, and cost conditions.
Compare Steve's un-regulated profit maximizing production quantity (Qf) to his socially efficient production quantity (Qe) that would result from an optimally set pollution tax.
Steve's paper factory is polluting a local river and the following information is provided on its production quantity, profit, demand, and cost conditions.
If the government gives Steve 2 permits for free, and the permits trade at a market price of \$50 each, what will Steve's profit be equal to after he optimally trades permits?