4 Externalities I Consider the market for private economics tutors in Davis. Assume it is perfectly compet- itive. The market's inverse demand curve is p = 3200 10Q), with @) being the number of students receiving tutor per quarter and p being price per quarter. Economics tutors' private marginal cost curve is MCP = 200 4+ 10Q. Also assume that, because economics professors curve their classes, when one student improves her grade, it causes every other student to have a lower grade. This is a negative externality. Assume the marginal cost of curving is MCC = 5Q. 4.1 Please find the perfectly competitive equilibrium of this mar- ket. 4.2 Please find the socially optimal equilibrium of this market. 4.3 Please draw this market, including the following curves demand, private marginal cost, and social marginal cost. Also label the following pointsthe perfectly competitive equilib- rium and the socially optimal equilibrium. Also please label axes and where curves cross axes. 4.4 What is deadweight loss in this market? Now suppose that the City of Davis wants to ensure the socially optimal equilibrium in this market by imposing a standard. 4.5 What standard should the City of Davis set? Now suppose that instead of a standard the City of Davis wants to impose a specific tax on this market to ensure the socially optimal equilibrium. 4.6 What specific tax should the city of Davis set? Now suppose that instead of a standard or specific tax the City of Davis wants to ensure the socially optimal equilibrium by assigning property rights to students to not have their grade lowered by other students' performance. 4.7 Why might assigning property rights fail to ensure the socially optimal equilibrium? Please give at least three reasons