The demand for drive-in movies is given by P = 20 – 0.1Q. The supply curve for drive-in movies is given by P = 0.1Q. Drive-in movies can be viewed imperfectly from outside the fence. The external marginal benefit received by such viewers is given by EMB = 2 – 0.01Q. Calculate the deadweight loss from the externality.

The demand for drive-in movies is given by P = 20 – 0.1Q. The supply curve for drive-in movies is given by P = 0.1Q. Drive-in movies can be viewed imperfectly from outside the fence. The external marginal benefit received by such viewers is given by EMB = 2 – 0.01Q. Calculate the deadweight loss from the externality.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section10.1: Externalities And Market Inefficiency

Problem 1QQ

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