Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 2WNG
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Micro economics question
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![Suppose the equation for the demand curve in a market is P = 120-(1/5)Q, and the equation for the supply curve
in the same market is P = (1/10)Q.
Suppose there is an external cost of $12 associated with the production of each unit of the good. What
particular tax or subsidy would move the market to the social optimum?
What are the socially optimal quantity and price?
Suppose there is an external cost of $12 associated with the production of each unit of the
good. What are the socially optimal quantity and price?
D 1080-
acer](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc3231216-ac6a-463c-8e67-724e263e6aaa%2F682efb86-748d-4ba6-93ee-d01612e8f0a8%2Fvvoe6eo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose the equation for the demand curve in a market is P = 120-(1/5)Q, and the equation for the supply curve
in the same market is P = (1/10)Q.
Suppose there is an external cost of $12 associated with the production of each unit of the good. What
particular tax or subsidy would move the market to the social optimum?
What are the socially optimal quantity and price?
Suppose there is an external cost of $12 associated with the production of each unit of the
good. What are the socially optimal quantity and price?
D 1080-
acer
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