3. Suppose that the inverse market demand curve for cloth is p = 150 - 20, the privatemarginal cost (unregulated competitive market supply) is MCp = 75 + Q, and theprivate marginal damage from pollution is MCd = 20.a) What is the unregulated competitive equilibrium quantity and price?b) What is the social marginal cost of production and social equilibrium quantityand price?c) What specific tax t (per unit) would result in the social optimum?

Given Inverse demand curve P = 150 - 2QPrivate marginal cost(MPC) MCp = 75 +QPrivate marginal damage…

3. Suppose that the inverse market demand curve for cloth is p = 150 - 2Q, the private marginal cost (unregulated competitive market supply) is MCp=75 + Q, and the private marginal damage from pollution is MCd = 2Q. a) What is the unregulated competitive equilibrium quantity and price? b) What is the social marginal cost of production and social equilibrium quantity and price? c) What specific tax t (per unit) would result in the social optimum?

3. Suppose that the inverse market demand curve for cloth is p = 150 - 2Q, the private marginal cost (unregulated competitive market supply) is MCp=75 + Q, and the private marginal damage from pollution is MCd = 2Q. a) What is the unregulated competitive equilibrium quantity and price? b) What is the social marginal cost of production and social equilibrium quantity and price? c) What specific tax t (per unit) would result in the social optimum?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter8: Market Failure

Section: Chapter Questions

Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...

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