Essay
Consider the case of two farmers,Tony and Hakim,depicted in the following figure.Both use DDT (a chemical pesticide)for their crops.The use of DDT causes an externality for swimmers down river from the farms.
(a)Show the amount of pesticides used if each uses the privately optimal level of pesticides.
(b)Show the amount of pesticides used if they are socially concerned.
(c)Why is a reduction back to XH = HT not socially desired?
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(b) ...
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