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Question 4: In a market with demand: Q=200-2P, supply Q-P-40, if for every unit consumed, the society gets a benefit equivalent to $15 (MEB=$15) (25%)
Question 4: In a market with demand: Q=200-2P, supply Q-P-40, if for every unit consumed, the society gets a benefit equivalent to $15 (MEB=$15) (25%) I. What is the SS when this is a free market? II. What is the DWL of the market due to the externality? III. Suppose the government uses a Pigouvian subsidy to correct this market failure, compute the CS, PS, S(subsidy), EB(external benefit) of the market under this tax
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