3. Suppose that the inverse market demand curve for cloth is p = 150 - 20, the privatemarginal cost (unregulated competitive market supply) is MCp = 75 + Q, and theprivate marginal damage from pollution is MCd = 20.a) What is the unregulated competitive equilibrium quantity and price?b) What is the social marginal cost of production and social equilibrium quantityand price?c) What specific tax t (per unit) would result in the social optimum?

Given Inverse demand curve P = 150 - 2QPrivate marginal cost(MPC) MCp = 75 +QPrivate marginal damage…

3. Suppose that the inverse market demand curve for cloth is p = 150 - 2Q, the private marginal cost (unregulated competitive market supply) is MCp=75 + Q, and the private marginal damage from pollution is MCd = 2Q. a) What is the unregulated competitive equilibrium quantity and price? b) What is the social marginal cost of production and social equilibrium quantity and price? c) What specific tax t (per unit) would result in the social optimum?

3. Suppose that the inverse market demand curve for cloth is p = 150 - 2Q, the private marginal cost (unregulated competitive market supply) is MCp=75 + Q, and the private marginal damage from pollution is MCd = 2Q. a) What is the unregulated competitive equilibrium quantity and price? b) What is the social marginal cost of production and social equilibrium quantity and price? c) What specific tax t (per unit) would result in the social optimum?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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