5 MSC S = MC 4 Price (dollars per ton of lead) 3 2 . . .. D = MSB 0 40 50 60 70
5 MSC S = MC 4 Price (dollars per ton of lead) 3 2 . . .. D = MSB 0 40 50 60 70 80 Lead (tons per year) The figure above shows the market for lead. The production of lead creates pollution. 1. What is the efficient quantity? (2 points) 2. If the market is left unregulated, what is the equilibrium quantity? How much is the deadweight loss and illustrate it in the figure. (calculate the value of the DWL). (4 points)
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