The following equations represent the MWTP function and the private MC function in the market for...

The following equations represent the MWTP function and the private MC function in the market for some good where an external cost (negative externality) like pollution results in damages of $6 per unit of the good produced:
MWTP = 65 - 0.5Q^D
MPC = 2 + Q^S
Solve for the competitive market equilibrium output and the socially efficient level of output for this market.

Expert Solution

Rahul Sunny answered 2 years ago

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