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Apple trees grown in a homeowner's front yard provide a direct benefit to the homeowner as well as an external benefit to their neighbors. The

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Apple trees grown in a homeowner's front yard provide a direct benefit to the homeowner as well as an external benefit to their neighbors. The demand for apple saplings in a small town is Q=100-P, the supply is Q=P, and the marginal external benefit is MEB=44-0.4Q. Assume the market is competitive. (D What is the competitive equilibrium price and quantity? (ii) Find an expression for the marginal social benefit as a function of Q. (iii) What level of output would maximize total surplus? (iv) Calculate the per-tree subsidy that would increase output from the competitive equilibrium to the output you found in (iii)

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