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Question 1.2 In the following graph we see an externality, which means inefficiency exists. Suppose the Marginal Private Cost function is estimated to be MPC= 30 + 0.50 and the Marginal External Cost is estimated to be $10 per unit (constant). If the market price is given as $70 per unit and then what would be the market inefficient amount (Q) and the estimated total inefficiency (Hint: Find the MPC using MSC=MPC+MEC and also Q* and Om by equating the Price to Marginal Costs). Price (dollars per unit} Social Marginal Cost Private Marginal Cost Price A D B Q' Q_ Production