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(a) What is the market equilibrium price and quantity? (5% each) (b) What is the socially optimal equilibrium price and quantity? (5% each) (c) What
(a) What is the market equilibrium price and quantity?(5% each)
(b) What is the socially optimal equilibrium price and quantity?(5% each)
(c) What is the Deadweight Loss?(5% each)
(d) If a Pigouvian tax were to be imposed on this market, in order to bring about the socially-optimal level, then how much should the tax be?(5% each)
(e) Besides a Pigouvian tax, what policy can be adopted to turn the market towards the socially-optimal level?
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