Question

A study finds that the noise from airplanes is harmful; hence, the government imposes a $25 tax on the sale of every airplane. This amount accurately accounts for the external cost of the noise pollution. Before the corrective tax, airplane tickets regularly sold for $190. After the tax is in place, the market price for airplane tickets rises to $195. Because of the tax, the number of airplane tickets sold will decrease . The socially optimal price of airplane tickets is $ . The private market price is $ . A firm selling airplane tickets receives $ after it pays the tax.

Answer 1

Answer:

Negative externality is the point at which the onlooker bears the expense of any action. To disguise this externality, government forces charge equivalent to the outside expense.  

In negative externality showcase delivers more amount than socially ideal amount. At the point when government forces charge, it decreases the market amount and brings it equivalent to ideal amount.

1. As of tax, the number of tickets selling is reduce.
2. Socially the optimal price for ticket is $205.
3. The private market price is $190.
4. After tax, the firm will get $205 - $25 = $180