Suppose the demand for a product is P = 400 - 0.25 Q and the supply of the product is P = 100 +0.75 P where Q is output and P is price. Suppose also that the marginal external cost (MEC) from production is constant and equal to 50$ per unit. What is the competitive (private) efficient level of output? What is the socially efficient level of output?
Suppose the demand for a product is P = 400 - 0.25 Q and the supply of the product is P = 100 +0.75 P where Q is output and P is price. Suppose also that the marginal external cost (MEC) from production is constant and equal to 50$ per unit. What is the competitive (private) efficient level of output? What is the socially efficient level of output?
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 6QFR
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