3) The market for paper in a particular region in the United States is characterized by the following demand and supply curves P = 80 -0.0005QD and P=0.0005Qs - 20 where is the quantity demanded in 100-pound lots, s is the quantity supplied in 100-pound lots, and Pis the price per 100-pound lot. Currently there is no attempt to regulate the dumping of effluent into streams and rivers by the paper mills. As a result, dumping is widespread. The marginal external cost (MEC) associated with the production of paper is given by the curve MECE 0.0006 S. a. b. C. Calculate the output and price of paper if it is produced under competitive conditions and no attempt is made to monitor or regulate the dumping of effluent. Determine the socially efficient price and output of paper. Explain why the answers you calculated in parts a and b differ.

3) The market for paper in a particular region in the United States is characterized by the following demand and supply curves P = 80 -0.0005QD and P=0.0005Qs - 20 where is the quantity demanded in 100-pound lots, s is the quantity supplied in 100-pound lots, and Pis the price per 100-pound lot. Currently there is no attempt to regulate the dumping of effluent into streams and rivers by the paper mills. As a result, dumping is widespread. The marginal external cost (MEC) associated with the production of paper is given by the curve MECE 0.0006 S. a. b. C. Calculate the output and price of paper if it is produced under competitive conditions and no attempt is made to monitor or regulate the dumping of effluent. Determine the socially efficient price and output of paper. Explain why the answers you calculated in parts a and b differ.

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 5PA: The many identical residents of Whoville love drinking Zlurp. Each resident has the following...

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