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Suppose that the inverse demand for marching band music is given by P = 1000 - Q. Because marching bands across the world produce music
Suppose that the inverse demand for marching band music is given by P = 1000 - Q. Because marching bands across the world produce music of sufficient quality at increasing marginal cost, the industry marginal cost is given by MC = 2/3Q. Unfortunately, marching band music is not produced in a vacuum: People near marching bands become increasingly aggravated, the more music they hear. At the industry level, the external marginal cost is given by EMC = 1/3Q. A. Find the market equilibrium price and quantity of music? B. What is the consumer surplus, producer surplus, and deadweight loss in the market? C. If the band considers the external marginal costs of its music playing, what is the equilibrium price and quantity of music? D. What is the consumer surplus, producer surplus, and deadweight loss in the market when the band considers the external marginal costs of its music
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