The table below shows cost data for producing different amounts of oil. The market for oil produces negative externalities in the form of pollution and environmental damage. Price Demand Private Supply Private+Social Supply 4 55 40 10 12 50 50 20 20 45 60 30 28 40 70 40 36 35 80 50 How barrels of oil will be produced by the free market? many What is the socially optimal output of oil?

Microeconomics
13th Edition
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter17: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
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The table below shows cost data for producing different amounts of oil. The market for oil produces negative externalities in the
form of pollution and environmental damage.
ITTT
Price Demand Private Supply Private+Social Supply
4
55
40
10
12
50
50
20
20
45
60
30
28
40
70
40
36
35
80
50
How many barrels of oil will be produced by the free market?
What is the socially optimal output of oil?
Transcribed Image Text:The table below shows cost data for producing different amounts of oil. The market for oil produces negative externalities in the form of pollution and environmental damage. ITTT Price Demand Private Supply Private+Social Supply 4 55 40 10 12 50 50 20 20 45 60 30 28 40 70 40 36 35 80 50 How many barrels of oil will be produced by the free market? What is the socially optimal output of oil?
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