7. In a market for dry cleaning, the inverse marketdemand function is given byP= 100- 0, and the(private) marginal cost of producbion for the aggrega-tion of all dry-cleaning firms is given by MC = 10 + Q.Finally, the pollution generated by the dry cleaningprocess creates external damages given by the mar-ginal external cost.curve MEC0,a Calculate the output and price of dry cleaning if itis produced under competitive conditions withoutregulation.b. Determine the socially efficient price and output ofdry cleaningc Determine the tax that would result in a competi-live market pmducing the socially efficent output.d. Caleulate th oulput and price of dry clearing if itsproduced under monopoliklieconditions withrtregulatione Delermine the tax that would result in a moopols-ie market produring the soclally eficient outpuL

In competitive equilibrium, P = MC. 100 - Q = 10 + Q 2Q = 90 Q = 45 P = 100 - 45 = 55

In a market lor dry clCAning, the inverse marke demand function is given by P 100-0, and the (private) marginal.cost of producton for the aggrega- tion of all dry-cleaning firms is given by MC = 10+ Q. Finally, the pollution generaled by the dry deaning process creafes external damages given by the mar- ginal external cost.curve MEC = Q.

In a market lor dry clCAning, the inverse marke demand function is given by P 100-0, and the (private) marginal.cost of producton for the aggrega- tion of all dry-cleaning firms is given by MC = 10+ Q. Finally, the pollution generaled by the dry deaning process creafes external damages given by the mar- ginal external cost.curve MEC = Q.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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