Many municipalities are concerned about the environmental impact of plastic bags

Question

Many municipalities are concerned about the environmental impact of plastic bags, which often end up as litter, clogging drains hanging from tree branches. A town is considering whether to impose a tax on plastic bags to be collected at the store or a per person quota. Cindy and and grocery shopping. Plastic bags are currently free when they shop. The figures below show each individual's demand curve for plastic bags (A) Quota nts 8)Tax Price (5) Price (S) 1.0 Quota 08 05 indy 02 02 Quantity of plastic bags Quantity of plastic bags Instructions: Round your answers to the nearest cent a Under the quota, the willingness to pay for the last bag used for andy is S and for Cars Instructions: Round your answers to the nearest whole number b. Under the tax, Cindy will use bags and Carl will use bags Instructions: Round your answers to the nearest cent

Explanation / Answer

(a) Under the quota, willingness to pay for Cindy is $0.6 and for Carl is $0.3.

(b) Under the tax, Cindy will use 30 bags and Carl will use 10 bags.

(c) Option (3)

Unlike a quota, a tax raises tax revenue for government.

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