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The demand and supply curves for production of plastic are shown as follow: Qd = 40,000 - 5000P Qs = 10,000 + 5,000P The marginal

The demand and supply curves for production of plastic are shown as follow:

Qd = 40,000 - 5000P Qs = 10,000 + 5,000P

The marginal external cost associate with production of plastic is given as: MEC = 0.0003Q

a. What is the competitive price and output?

b. What are the socially optimal levels for price and output?

c. Draw a diagram to show the costs and benefits to the society from the production of plastic.

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