Negative Externality Examples

Based on the news article from The New York Times, devil rivers in Guangxi Zhuang region, China was polluted by a give up of cadmium, detected early January this year. Tons of cadmium- the poisonous toxic admixture which can cause kidney failure and bone damage, is accidentally been liberate into the river by Guangxi Jinhe Mining Company and Jinchengjiang Hongquan Lithopone Material Corporation in Hechi city which has fouled drinking piss supplies for millions of people in Liuzhou. It is known that the spill has contaminated 200 miles of the LongJiang River for at to the lowest degree two weeks had kills 90,000 pounds of fish and millions of fry and several hundreds of villagers downstream had consumed the irrigate for five days before gets notified by the officials.
S + Tax
P
It is conjugated to a negative externality. Externality refers to the spillover effect to the third society from an activity whereby negative externality is external appeal which is the cost suffered by someone who was not directly involved in an economic activity. Referring to above case study, the spill affects the villagers drinking water supply because it has been polluted by the responsible company.




S=MPC

MPC = fringy Private Cost
MPB = Marginal Private Benefit
Pe
Ps
P1
D=MPB
Q
Qe
MEC=Tax
E1
E2
Qs
Diagram 1 Tax to overcome negative externality

The market supply contract is MPC, the sum of all the firms marginal cost thin outs. But this curve is only the curve of all their private cost. The private readiness is achieved where MPC=MPB at the equilibrium E1. If they considered the external cost such as cleaning up the river, their cost should be much higher. Therefore, the true to life(predicate) supply curve should be shifted to the left since the cost has increased.
Now, notion into the case study. To overcome this problem of negative externality, China should land tax, so that the company could reduce their production as hale as their toxic waste. After imposing tax, their cost is genuinely increases from...If you want to get a full essay, order it on our website: Orderessay



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