Answered: Suppose demand is QD=9−P and supply is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose demand is QD=9−P and supply is QS=P. There is a constant positive externality of $4 per unit (marginal external benefit, MEB = $4). Find the market equilibrium quantity and the socially optimal quantity. The market equilibrium quantity is enter your response here. (Round your answer to one decimal place.) The socially optimal quantity is enter your response here. (Round your answer to one decimal place.)

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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