Question: Suppose that demand for a product is Q 1 200

Suppose that demand for a product is Q = 1,200 – 4P and supply is Q = –200 + 2P.Furthermore, suppose that the marginal external damage of this product is $8 per unit. How many more units of this product will the free market produce than is socially optimal? Calculate the deadweight loss associated with the externality.



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  • CreatedApril 25, 2015
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