Given the following information (which is identical to the scenario in the video),Demand: Q = 10,000-2P• Supply: Q = -500 + 5PMarginal External Benefit: MEB = 0.1Q%3D(a) Graphically show the private market quantity and the socially optimal quantity. Fully label the graph and draw allrelevant curves.(b) Now suppose that the government implements a $400 subsidy per tree planted. Draw the "PMB + subsidy" curve andcalculate the quantity attained with this $400 subsidy.(c) Is this $400 subsidy a "Pigouvian" subsidy? Why or why not?

formation (which is ldentical to the scendrio in the video), 10,000-2P 500+5P ernal Benefit: MEB = 0.1Q the private market quantity and the socially optimal quantity. Fully label the grap t the government implements a $400 subsidy per tree planted. Draw the "PMB + y attained with this $400 subsidy. dy a "Pigouvian" subsidy? Why or why not?

formation (which is ldentical to the scendrio in the video), 10,000-2P 500+5P ernal Benefit: MEB = 0.1Q the private market quantity and the socially optimal quantity. Fully label the grap t the government implements a $400 subsidy per tree planted. Draw the "PMB + y attained with this $400 subsidy. dy a "Pigouvian" subsidy? Why or why not?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 10PAE

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