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5. Suppose that the inverse demand curve for Internet services p = 200 @) and private marginal cost (unregulated competitive market supply) is MC =
5. Suppose that the inverse demand curve for Internet services p = 200 @) and private marginal cost (unregulated competitive market supply) is MC = 2042@Q), but Government thinks that the spread of Internet is having a marginal social benefit (cost saving) estimated in MCsprrap = Q. a. Which is the unregulated competitive equilibrium? b. What is the social optimum? c. Compute the increase in sonsumer welfare in the equilibrium which ac- counts for the externality. d What specific subsidy (per unit of output) may induce the social optimum
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