ANSWER A, B, C and D

Answer accordingly and answer all (SHOW SOLUTION)

This table shows private and social costs and benefits of producing chemical fertilizer. Use this information to answer the questions below. Market for Chemical Fertilizer Quantity Marginal Marginal Marginal Marginal of Output Private Benefit Social Benefit Private Cost Social Cost (MB) (MSB) (MC) (MSC) $70 $70 $10 $30 $60 $60 $20 $40 W $50 $50 $30 $50 $40 $40 $40 $60 $30 $30 $50 $70 $20 $20 $60 $80 a. What is the market-clearing equilibrium quantity? What is the market-clearing equilibrium price? Explain how you chose those numbers. b. What is the socially best quantity? What is the socially best price? Explain how you chose those numbers. C. What kind of externality does the chemical fertilizer market have? What is the external benefit or cost per unit? d. Explain the relationship between the equilibrium quantity and price, and the socially best quantity and price