Question 1, Text Exercise 2.2 HW Score: 0%, 0 of 11 points QO Points: 0of 1 The figure to the right illustrates the market for paper, where paper creates a negative externality in production. Assume D is the demand curve, MCP is the private marginal cost curve, MCY is the marginal cost of the externality, and MC is the social marginal cost curve. In the figure, explain why area D + E + H is the externality cost difference between the social optimum (at e, ) and the private equilibrium (at e,,). The area D + E + H is the externality cost difference between the social optimum and the private equilibrium because () A. this is the difference in private cost from producing the competitive output rather than the sacially optimal quantity. (O B. this is the cost of the extra pollution damage from producing the competitive output rather than the socially optimal quantity. (O) C. this is the difference in producer surplus from producing the competitive output rather than the socially optimal quantity. () D. this is the deadweight loss from producing the competitive output rather than the socially optimal quantity. () E. this is the difference in social cost from producing the competitive output rather than the socially optimal quantity. Price of paper, p, $ per ton MC =MCP +mc? ] MC o P Q, q Q, Tons of paper per day Question 2, Concept Question 2.4 Part 2 of 3 (Ml RN | Suppose that the inverse demand curve for paper is p = 224 - Q, the private marginal cost (unregulated competitive market supply) is MC,, = 104 + Q, and the marginal harm from gunk is MC,, = Q. ~ What is the unregulated competitive equilibrium quantity? 60 (round your answer to the nearest integer) What is the unregulated competitive equilibrium price? $ 164 (round your answer to the nearest penny) What is the social optimum quantity? (round your answer to the nearest integer) What is the saocial optimum price? $| | (round your answer to the nearest penny)