The market for good Q is perfectly competitive. However, it features positive externalities. Consumers' marginal private benefit is MB = 100-Q Producers' marginal cost is MC = Q. The consumption of this good generates a marginal external benefit MEB=2. a) In the equilibrium of this market, the perfect competition quantity is Qpc= b) The socially efficient quantity is Qsoc= c) To achieve efficiency, the government can introduce a
The market for good Q is perfectly competitive. However, it features positive externalities. Consumers' marginal private benefit is MB = 100-Q Producers' marginal cost is MC = Q. The consumption of this good generates a marginal external benefit MEB=2. a) In the equilibrium of this market, the perfect competition quantity is Qpc= b) The socially efficient quantity is Qsoc= c) To achieve efficiency, the government can introduce a
Chapter14: Environmental Economics
Section: Chapter Questions
Problem 11SQ
Related questions
Question
Transcribed Image Text:The market for good Q is perfectly competitive. However, it features positive externalities.
Consumers' marginal private benefit is MB = 100-Q
Producers' marginal cost is MC = Q.
The consumption of this good generates a marginal external benefit MEB=2.
a) In the equilibrium of this market, the perfect competition quantity is Qpc=
b) The socially efficient quantity is Qsoc=
c) To achieve efficiency, the government can introduce a
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc