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The equations below describe a market with an externality created by producers. Demand for the product is given by Q = 226 - 3P Private
The equations below describe a market with an externality created by producers. Demand for the product is given by Q = 226 - 3P Private Marginal Cost (Supply) is given by Q = 2P - 42 Social Marginal Cost is given by Q = 4P - 64 A Pigouvian tax/subsidy placed on producers could correct this externality. What size tax would correct this externality
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