ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question

Suppose the demand and supply curve for crude oil at any given period is:

Pd= =380−3Q and Ps=28+1Q

Where price is measured in dollars and quantity is measured in barrels. Furthermore, for each barrel of oil
produced, there is $32 worth of negative externality.

The market currently unregulated and produces 88 barrels of oil and the market price is $116.

Externality, Part A:

What is the Total Social Welfare before government regulation?

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