Question
The demand for energy-efficient appliances is given by p = 100/Q, while the marginal (private) cost curve is M C = Q. Since energy efficient
The demand for energy-efficient appliances is given by p = 100/Q, while the marginal (private) cost curve is M C = Q. Since energy efficient appliances reduce energy demand, the true (social) marginal cost of appliances is SM C = eQ. a. What is the equilibrium amount of energy-efficient appliances traded in the private market? Show the answer on a diagram. b. If the socially efficient number of energy-efficient appliances is Q = 20, what is the value of e? Show the answer on a diagram where e is the value you calculate. c. Using your answers above, calculate the value of deadweight loss that would occur in the private market equilibrium
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