Question
Imagine a market where there is a positive externality in production. The private (and social) inverse demand function for the good is: D_private: P_D =
Imagine a market where there is a positive externality in production. The private (and social) inverse demand function for the good is:
D_private: P_D = 22 - 1.5Q_D.
The private inverse supply function is:
S_private: P_S = 8 + 0.5Q_S.
The social inverse supply function that accounts for the positive externality in production is:
S_social: P_S = 2 + 0.5Q_S.What is the deadweight loss from the externality?
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Puzzle Of Latin American Economic Development
Authors: Patrice Franko
2nd Edition
0742524663, 9780742524668
