Suppose the equation for the demand curve in a market is P=100 - 1.5Q. Also, suppose the equation for the supply curve in the same market is P=0.5Q. Suppose there is an external cost of $40 associated with the production of each unit of the good. What is the optimal quantity, and what is the price at this quantity? O P-531 Q-46 O Pu$34 Q=44 O P-555 Q-30 o P-$2 Q-44
Suppose the equation for the demand curve in a market is P=100 - 1.5Q. Also, suppose the equation for the supply curve in the same market is P=0.5Q. Suppose there is an external cost of $40 associated with the production of each unit of the good. What is the optimal quantity, and what is the price at this quantity? O P-531 Q-46 O Pu$34 Q=44 O P-555 Q-30 o P-$2 Q-44
Chapter17: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 2QP
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Transcribed Image Text:Suppose the equation for the demand curve in a market is P=100 - 1.5Q. Also, suppose the equation for the supply curve in the same market is P=0.5Q. Suppose there is an external cost of $40 associated with the production of each unit of the good. What is the socially
optimal quantity, and what is the price at this quantity?
P=$31 Q=46
P=$34 Q=44
P=$55 Q=30
P=$2 Q=44
O.
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