Suppose that demand for anchovy pizza is given by PD = 50 – QD, and the supply of anchovy pizza is given by PS = Q$. Anchovy pizza smells bad. The bad smell imposes an external cost on %3D anyone near the pizza equal to $5 per pizza. What is the socially efficient quantity of anchovy pizza production?

Economics:
10th Edition
ISBN:9781285859460
Author:BOYES, William
Publisher:BOYES, William
Chapter27: Markets And Government
Section: Chapter Questions
Problem 12E
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100%
50 – Qº, and the supply of anchovy
pizza is given by PS = Q$. Anchovy pizza smells bad. The bad smell imposes an external cost on
Suppose that demand for anchovy pizza is given by PD
anyone near the pizza equal to $5 per pizza. What is the socially efficient quantity of anchovy
pizza production?
22.5
27.5
30
25
Transcribed Image Text:50 – Qº, and the supply of anchovy pizza is given by PS = Q$. Anchovy pizza smells bad. The bad smell imposes an external cost on Suppose that demand for anchovy pizza is given by PD anyone near the pizza equal to $5 per pizza. What is the socially efficient quantity of anchovy pizza production? 22.5 27.5 30 25
In a market with a
positive externality, a Pigouvian subsidy maximizes total surplus.
False
True
Transcribed Image Text:In a market with a positive externality, a Pigouvian subsidy maximizes total surplus. False True
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