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
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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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?
Transcribed Image Text: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?
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