Suppose That the Demand for a Chemical Is Given by Q

question 48

Essay

Suppose that the demand for a chemical is given by Q = 100 - 2P,where quantity is measured in pounds.The market supply is given by MC = 5.Assume that the marginal external damage of this product is $3 per unit.
(a)What is the equilibrium price and quantity of this good without government intervention?
(b)What level of taxation would generate the socially efficient level of the good?

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