Suppose the equation for the demand curve in a market is P-100-1.5Qp, where Qn is the quantity demanded and P is the price. Also, suppose the equation for the supply curve in the same market is P=0.5Qs, where Q, is the quantity supplied. Suppose there is an external cost of $12 associated with the production of each unit of the good. What is the socially optimal quantity, and how much is the social cost at this quantity?
Suppose the equation for the demand curve in a market is P-100-1.5Qp, where Qn is the quantity demanded and P is the price. Also, suppose the equation for the supply curve in the same market is P=0.5Qs, where Q, is the quantity supplied. Suppose there is an external cost of $12 associated with the production of each unit of the good. What is the socially optimal quantity, and how much is the social cost at this quantity?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 6QFR
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