|Question||The US government recently raised its estimate of the social damage from greenhouse gases such as carbon dioxide. Steel production generates a great deal of carbon dioxide. Present and discuss a diagram to explain your answers to the following two questions.
a. Will the new higher estimate of social cost imply a higher or lower efficient quantity of steel?
b. Will the new higher estimate of social cost imply a higher or lower level of the Pigouvian tax required to lead to the efficient level of steel?