00:01
So in an unregulated market, the equilibrium occurs where the marginal private cost mpc equals the marginal benefit mdp.
00:12
Setting mpc equals to the universal demand curve pd.
00:16
So 2 plus q equals 24 minus 2.
00:22
So solving for q, we get q equals 11.
00:25
And substituting qj to the inverse demand curve, we find that equilibrium price.
00:34
We get pd equals 24 minus 11, which is 12 .3.
00:41
So equilibrium price is $2 .13.
00:56
In equilibrium quantity, we get this from a bar into b bar here.
01:08
At the social optimum, the quantity supply should be where the marginal social cost mfc equals to marginal benefit mdp.
01:23
The mfc is the sum of the marginal private cost mpc and marginal external cost mdp.
01:34
So here we get mfc equals mpc plus mec equals 2 plus q plus 0 .5q.
01:51
So we get 2 .5q plus 2...