Explain to them what the most-efficient tax level will be, Microeconomics

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Explain to them what the most-efficient tax level will be

Problem

Suppose that you are an economic-policy advisor. Environmental groups are pressuring you to implement the highest-possible carbon tax, while industry groups are pressuring you to implement no carbon tax at all. Both argue that their position makes more sense economically. Explain to them what the most-efficient tax level will be, and why there are costs to setting the tax too high or too low.

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