Question: 1)Consider a marginal cost function of MC = 6 + 2Q and a constant price of P = 12. Additionally, there are negative externalities of

1)Consider a marginal cost function of MC = 6 + 2Q and a constant price of P = 12. Additionally, there are negative externalities of E= 3 per unit of Q . What is the total net social benefit of production (total social benefits - total social costs) at the socially optimal level of production?

2)Consider a firm that owns an oil field. The marginal cost of oil extraction is MC = Q where Q is the quantity of oil and the market price of oil is $12 per quantity Q. Extracting one unit of oil reduces the value of the oil field by $5. Without discounting, how much oil should the firm extract (private optimum)?

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