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Business, 26.06.2020 16:01 syrai7404

Suppose the initial marginal cost per mile traveled by car is $0.32, and the initial mileage for the typical driver is 1,000 per month. Assume the elasticity of miles driven with respect to the price is −1.0. Suppose the government uses a per-mile tax to internalize the environmental externalities associated with car travel (for air pollution and CO2 ). Illustrate the effects of the tax on equilibrium miles driven, including a new value for miles driven

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Suppose the initial marginal cost per mile traveled by car is $0.32, and the initial mileage for the...
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