Question

The market for good Q is perfectly competitive. However, it features negative externalities. Consumers' marginal benefit is MB = 90 - Q. Producers' marginal private cost is MC = Q. The production of this good generates a marginal external cost MEC = 4. a) In the equilibrium of this market, the perfect competition quantity is QPC = 45. b) The socially efficient quantity is Qsoc = 43. c) To achieve efficiency, the government can introduce: - $2 per unit subsidy - $4 per unit subsidy - $2 per unit tax - $4 per unit tax QUESTION 9 The market for good is perfectly competitive. However, it features negative externalities. Consumers' marginal private benefit is MB = 100 - Q.

          The market for good Q is perfectly competitive. However, it features negative externalities.
Consumers' marginal benefit is MB = 90 - Q.
Producers' marginal private cost is MC = Q.
The production of this good generates a marginal external cost MEC = 4.
a) In the equilibrium of this market, the perfect competition quantity is QPC = 45.
b) The socially efficient quantity is Qsoc = 43.
c) To achieve efficiency, the government can introduce:
- $2 per unit subsidy
- $4 per unit subsidy
- $2 per unit tax
- $4 per unit tax

QUESTION 9
The market for good is perfectly competitive. However, it features negative externalities.
Consumers' marginal private benefit is MB = 100 - Q.

Added by Diane W.

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