A perfectly competitive firm uses coal to generate electricity. Its supply curve is Q = 100P...

  

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A perfectly competitive firm uses coal to generate electricity. Its supply curve is Q = 100P - 1350, where Q is the quantity produced (units of electricity per year), and P is the market price of electricity per unit. The production of each unit of electricity results in a tonne of sulphur dioxide emissions which is estimated to cost the economy $15. If electricity is sold in the market at $40 per unit, what is the optimal level of output from the viewpoint of the: a) firm? b) economy as a whole? A perfectly competitive firm uses coal to generate electricity. Its supply curve is Q = 100P - 1350, where Q is the quantity produced (units of electricity per year), and P is the market price of electricity per unit. The production of each unit of electricity results in a tonne of sulphur dioxide emissions which is estimated to cost the economy $15. If electricity is sold in the market at $40 per unit, what is the optimal level of output from the viewpoint of the: a) firm? b) economy as a whole?

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To solve this problem we need to determine the optimal level of output from the perspective of the f... View the full answer