Greater air pollution from car production leads to increased rates of asthma and infant mortality, imposing costs on the rest of society. The inverse demand for cars is given by the function P=100-5q while the private costs are given by the function P=20+5q. Additionally, we know that each car imposes a $10 per-unit external cost on society. What is the socially optimal number of cars produced?

Greater air pollution from car production leads to increased rates of asthma and infant mortality, imposing costs on the rest of society. The inverse demand for cars is given by the function P=100-5q while the private costs are given by the function P=20+5q. Additionally, we know that each car imposes a $10 per-unit external cost on society. What is the socially optimal number of cars produced?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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