Many municipalities are concerned about the environmental impact of plastic bags, which often end up as litter, clogging drains, and 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 carl are two average citizens who both use plastic bags when they go grocery shopping. plastic bags are currently free when they shop. the figures below show each individual's demand curve for plastic bags.

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Business

Annie Shelton

11 April, 02:29

Many municipalities are concerned about the environmental impact of plastic bags, which often end up as litter, clogging drains, and 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 carl are two average citizens who both use plastic bags when they go grocery shopping. plastic bags are currently free when they shop. the figures below show each individual's demand curve for plastic bags.

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Harold Mccullough · Answer 1

Under the quota,

The willingness to pay of an individual tell us that what price he is ready to pay for quantity in the market. There is quota in the market, so Cindy and Carl cannot buy more than quota amount. Thus, Last unit that Cindy purchase is priced $0.6. The last unit Carl purchased at $0.3.

Under the tax,

Cindy will use 30 plastic bags and Carl will use 10 bags. We can see this into the diagram under tax. Cindy's demand curve cut tax line at 30 bags and Carl's demand curve cuts tax line at 10 bags.

The willingness to pay for the last bag used for Cindy is $0.4 and for Carl $0.4