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Demand: P = 100 - 4Q Supply: P = 0.1 + 0.05Q Suppose the marginal external costs of gasoline consumption (in dollars per unit of
Demand: P = 100 - 4Q
Supply: P = 0.1 + 0.05Q
Suppose the marginal external costs of gasoline consumption (in dollars per unit of gasoline) are $1.5 per gallon. Then, the total external costs of gasoline consumption are 1.5*Q.
How do I find the Pareto optimal allocation(after accounting for total external cost)?
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