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**Re: eco**

student92 said:hi can anybody explain this mcq to me.

thank you

the correct answer is d

I'll give a try here...

the marginal value of smoke nuisance is the marginal external cost of production

specific tax will be imposed to cover the external cost produced and after imposing the tax the price will equal MPC+MEC (marginal external cost)

the price of the product is 2.00, hence choose values from the table that will add up to 2.00..you will see that at output 92, mpc is 1.20 and mec is 0.80... thus the tax is 0.80...