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Question 6 .You work in the widget manufacturing industry. Widget production uses a techonolgy that emits pollution. Industry supply and demand graphs for widgets are

Question 6.You work in the widget manufacturing industry. Widget production uses a techonolgy that emits pollution. Industry supply and demand graphs for widgets are shown below.

  1. How many widgets will the market produce?

What is the market price of widgets?

Q = ___________ P = $ ___________

  1. Because of the externality market outcomes differ from socially optimal outcomes. How many widgets are socially optimal?

What is the socially optimal price of widgets?

Q = ___________ P = $ ___________

  1. What is the external marginal cost per widget?

$____________

  1. Discuss how socially optimal outcomes can be achieved.
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