(a) Plot the private demand curve and private supply curve for both cigarettes on separate axes. (b) What is the privately efficient quantity demand of both cigarettes? Qx = 80 - 2p Qx = 80 - 2(0) MCx = producing + damage Equalibrium = E = p = 15 y = 0 = 80 - 2p = 80 - 0 MC = 10 +5 E = Qx = 80 - 2(15) = p = = 40 Qx = 80 MCy = 15 E = 50 N Qy = 60 - .5p Qy = 60 - .5(0) MCy = 8+6 E = p = 14 y = 0 = 60 -.5p Qy = 60 - 0 MCy = 14. E = Qy =60 - .5(14) p = 60 = 120 .5 Qy = 60 E = 53 $1 1 20 Qy= 60- 5p Q X = 80 - 2 ITT 1 14 MC E MC $15 Price Price Quantity 53 160 Quantity 50 80(c) Add the public supply curves to the graphs you plot in (a). $1 1 20 Qy = 60 - 5p $ 40 Q X = 80 - 2p $ 19 E' SMC $19 E' SMC 1 14 E E MC - MC $15 Price Quantity Price Quantity 50.5 53 42 50 80 d) What is the socially efficient quantity demand of both cigarettes? SMCy = 14 + 5 = 19 = p = Qy = 60 - .5(19) = 60 - 9.5 = 50.5 SMC = 15 + 4 = 19 = p = Qx = 80 - 2(19) = 80 - 38 = 42e) Calculate the social loss for both. 1) Suppose the government decides to pursue a Pigouvian solution to eliminate social loss. What's the amount of tax or subsidy would the government implement? g) Besides the Pigouvian solution, what else solution do you have