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1. Consider the following market for a private good, where Anne and Beverly's demand curves are given by PA = 25 - Q PB =

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1. Consider the following market for a private good, where Anne and Beverly's demand curves are given by PA = 25 - Q PB = 25 - 5Q The marginal cost of this good is MC = 2Q (a) Calculate the market demand curve 2 points. (b) Depict this market graphically. 3 points. (c) Calculate the market price and quantity that will be produced, assuming this market is perfectly competitive. 3 points. (d) Argue that this outcome is efficient, both in productive efficiency and exchange efficiency.. 2 points

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