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The market for paper in XXX has the supply and demand curves as follows Qd = 160,000 - 2,000p Os = -40,000 + 2.000p, where
The market for paper in XXX has the supply and demand curves as follows" Qd = 160,000 - 2,000p Os = -40,000 + 2.000p, where Q is measured in hundred-pound lots, and p is price per hundred-pound lot. Without the regulation against dumping of pollutants into rivers by the paper mills, dumping is widespread. The marginal external cost associated with the paper production is MC = 0.00020. Compare the competitive equilibrium with the socially optimal equilibrium and calculate the deadweight loss.
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