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The inverse demand function for a good is P = 150 - 2Q, and the inverse supply curve is 15 + Q. Production of the
The inverse demand function for a good is P = 150 - 2Q, and the inverse supply curve is 15 + Q. Production of the good creates a positive externality of 9 per unit produced.
Left alone, how much will the market produce?
What is the socially optimal amount of production?
A subsidy of how much per unit could get this market to the socially optimal outcome?
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