The Demand Curve and Supply Curve for a Good Are

question 52

Essay

The demand curve and supply curve for a good are given by Q^D = 100 - 5P and Q^S = 1.25P - 2.5. Suppose the production of this good generates a negative externality, where the external marginal cost is constant at $2. To achieve the socially optimal output level, the government wants to implement a quota. What size should the quota be?

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Definitions:

Type A

A personality type characterized by competitiveness, impatience, and a high level of stress.

Type B

A personality type characterized by a more relaxed, less competitive, and less stress-prone behavior pattern compared to Type A.

Heart Disease

A broad term for a variety of diseases affecting the heart and blood vessels, such as coronary artery disease, heart failure, and arrhythmias.

Positivity

The practice or tendency of being optimistic in attitude and focusing on the good aspects of any situation.