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Suppose that the market for a certain good has an inverse demand of = 200 . The aggregate private marginal cost for the firms that
Suppose that the market for a certain good has an inverse demand of = 200 . The aggregate private marginal cost for the firms that produce the good is = 20 + . However, production of the good also creates pollution with a external marginal cost of = 10 + 2. e. If this is a perfectly competitive market with no regulation, what is the equilibrium price and quantity produced? f. Suppose instead that the market is a monopoly. Calculate the profit- maximizing price and quantity. g. Determine the socially efficient price and quantity for the good. h. Calculate the socially optimal per-unit tax to levy on the competitive firms and the monopolist respectively to make them produce at the socially efficient level
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