Externalities: Suppose the daily inverse demand curve for gasoline in Portland is given by P = $100 – Q, the MC = 1.5Q, and the EMC = 1.5Q. Q is measured in thousands of gallons of gasoline per day. a. Graph the demand, marginal cost, and external marginal cost functions. b. How many gallons will be consumed per day if gasoline consumers do not consider the EMC of gasoline? c. How many gallons of gasoline will be consumed per day if gasoline consumers consider the EMC.

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.4P
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Externalities: Suppose the daily inverse demand curve for gasoline in Portland is
given by P = $100 – Q, the MC = 1.5Q, and the EMC = 1.5Q. Q is measured in
thousands of gallons of gasoline per day.
a. Graph the demand, marginal cost, and external marginal cost functions.
b. How many gallons will be consumed per day if gasoline consumers do not
consider the EMC of gasoline?
c. How many gallons of gasoline will be consumed per day if gasoline
consumers consider the EMC.
Transcribed Image Text:Externalities: Suppose the daily inverse demand curve for gasoline in Portland is given by P = $100 – Q, the MC = 1.5Q, and the EMC = 1.5Q. Q is measured in thousands of gallons of gasoline per day. a. Graph the demand, marginal cost, and external marginal cost functions. b. How many gallons will be consumed per day if gasoline consumers do not consider the EMC of gasoline? c. How many gallons of gasoline will be consumed per day if gasoline consumers consider the EMC.
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