Suppose that in the cigarette market in Paris, the demand curve is given by P = 8.8- Q, and the supply curve is given by P = 6.3Q, where Q represents millions of cigarettes. Further, suppose that smoking cigarettes produces an additional cost for Paris residents valued at S15 per million cigarrettes. What is the socially optimal number of cigarettes consumed (in millions)?

Suppose that in the cigarette market in Paris, the demand curve is given by P = 8.8- Q, and the supply curve is given by P = 6.3Q, where Q represents millions of cigarettes. Further, suppose that smoking cigarettes produces an additional cost for Paris residents valued at S15 per million cigarrettes. What is the socially optimal number of cigarettes consumed (in millions)?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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Suppose that in the cigarette market in Paris, the demand curve is given by P = 8.8- Q, and the supply
curve is given by P = 6.30, where Q represents millions of cigarettes. Further, suppose that smoking
cigarettes produces an additional cost for Paris residents valued at $1.5 per million cigarrettes. What is the
socially optimal number of cigarettes consumed (in millions)?

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