The market for plastic skeletons is perfectly competitive, with demand and supply given by the equations: Demand: QD = 25 -0.5P Supply: Qs: = 2P However, this market does not consider the external benefit associated with putting up Halloween decorations like plastic skeletons. Economists have estimated that each plastic skeleton confers an external benefit to society such that MEB = 5. Use this information to answer the following two questions. 19. What is the socially optimal quantity of plastic skeletons? a. 12 b. 18 c. 20 d. 22 e. 25

The market for plastic skeletons is perfectly competitive, with demand and supply given by the equations: Demand: QD = 25 -0.5P Supply: Qs: = 2P However, this market does not consider the external benefit associated with putting up Halloween decorations like plastic skeletons. Economists have estimated that each plastic skeleton confers an external benefit to society such that MEB = 5. Use this information to answer the following two questions. 19. What is the socially optimal quantity of plastic skeletons? a. 12 b. 18 c. 20 d. 22 e. 25

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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