Question

Question 41 1p Planet Express delivers packages across the galaxy, but their spaceship pollutes the Earth's atmosphere as it takes off. If Planet Express is delivering exactly the number of packages that customers are willing to pay for, then that means... Planet Express is underproducing from a private viewpoint Planet Express is under producing from a social viewpoint Planet Express is overproducing from a social viewpoint Planet Express overproducing from a private viewpoint Question 42 1 pts If the local government wanted to reach a more socially optimal equilibrium, what policy options could it pursue? (check all that apply) The government can't do anything to improve social welfare Taxing customers of Planet Express so they are less incentivized to buy the service Forcing Planet Express to shut down Taxing the Planet Express so that it delivers fewer packages

Answer 1

Answer

1.Planet express is over producing from a social viewpoint

The delivery of packages has an external cost of pollution. As this cost is borne by the society and not the firm, and also planet express is supplying good at equilibrium, we can safely assume that planet express is over producing from a social point of view.

2. Taxing customers of planet express so they are less incentivized to buy the service ; taxing the planet express so that it delivers fewer packages

Taxing the customers will shift the demand curve to the left and reduce the equilibrium quantity. Similarly taxing the firm will degree supply shifting the supply curve to the left

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