Question
QD=40-2P and QS=P-8 represent market demand and supply functions for a good. If each unit of the good produced involves external costs of $4 (i.e.
QD=40-2P and QS=P-8 represent market demand and supply functions for a good. If each unit of the good produced involves external costs of $4 (i.e. MEC=4), then
(a) what amount of good is produced in the market equilibrium?
(b) What are marginal social benefits(MSB) and marginal social costs (MSC) at the market equilibrium quantity?
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Econometric Analysis
Authors: William H. Greene
5th Edition
130661899, 978-0130661890
