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A dry cleaner, So Clean, is willing to launder shirts at its cost of $2.00 per shirt. The neighbourhood demand for this service is P
A dry cleaner, So Clean, is willing to launder shirts at its cost of $2.00 per shirt. The neighbourhood demand for this service is P = 3 - 0.005Q. a) Draw the supply and demand lines in the graph below. Demand b) Calculate the market equilibrium quantity. Market equilibrium quantity = 0 c) Suppose that, for each shirt, So Clean emits chemicals into the local environment that cause $0.25 damage per shirt. This means the full cost of each shirt is really $2.25. Calculate the socially optimal number of shirts to be cleaned. Socially optimal number of shirts = 0
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