Consider the market for private economics tutors in Dallas. Assume it is perfectly competitive. The market's inverse demand curve is p = 1600 - 5Q with Q being the number of students receiving tutor per quarter and p being price per quarter. Economics tutor's private marginal cost curve is MC^P = 100 + 5Q. Also assume that, because economics professors curve their classes, when one student improves her grade, it causes every other student to have a lower grade. This is a negative externality. Assume the marginal cost of curving is MC^C = 5/2Q.

1. What is the perfectly competitive equilibrium of this market.
2. What is the socially optimal equilibrium of this market.
3. Draw the market, including the following curves - demand, private marginal cost, and social marginal cost. Also label the following points - the perfectly competitive equilibrium and the socially optimal equilibrium. Also label axes and where curves cross axes.
4. What is the deadweight loss in this market?

Now suppose that the city of Dallas wants to ensure the socially optimal equilibrium in this market by imposing a standard

1. What standard should the city of Dallas set?

Now suppose that instead of a standard the city of Dallas wants to impose a specific tax on this market to ensure the socially optimal equilibrium

1. What specific tax should the city of Dallas set?

Now suppose that instead of a standard or specific tax the city of Dallas wants to ensure that the socially optimal equilibrium by assigning property rights to students to not have their grade lowered by other student's performance

1. Why might assigning property rights fail to ensure the socially optimal equilibrium (give at least three reasons)