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Externalities: It turns out that the bottled milk market generates a negative externality, mainly that the plastic bottles pollute the town and nearby parks, the
Externalities: It turns out that the bottled milk market generates a negative externality, mainly that the plastic bottles pollute the town and nearby parks, the Marginal External Cost (MEC) of this pollution is: MEC = 0.1 * Q MEP = 0 TEC = 0.05 * Q2 f) restate the Supply and Demand functions you derived earlier by including into the Marginal Social Cost function, and the Marginal Social Benefit function, respectively, by including this the MEC into account. (recall: MSC = MPC MEC, MSB = MPB MEP). Then calculate the efficient equilibrium QE and PE, and the welfare gain by moving from the competitive to the efficient equilibrium (so get the demand and supply functions parts a/b after adding social cost - hint you might not need to change both of them!)
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