Consider the market for lead batteries. Market demand is described by the inverse demand curve, P = 200 - 20, where P is the market price, and Q is the market output. The market supply curve is given by the relationship, P = 20 + Q. Unfortunately, production of good lead batteries involves a marginal external cost with MEC=Q. 1. What is the socially optimal market output?

Consider the market for lead batteries. Market demand is described by the inverse demand curve, P = 200 - 20, where P is the market price, and Q is the market output. The market supply curve is given by the relationship, P = 20 + Q. Unfortunately, production of good lead batteries involves a marginal external cost with MEC=Q. 1. What is the socially optimal market output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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