Question: Given: MC (marginal cost) =10; MB (marginal benefit) = 100 - 2q; We have a NEGATIVE EXTERNALITY, and have a marginal external cost function MEC

Given:

MC (marginal cost) =10; MB (marginal benefit) = 100 - 2q;

We have a NEGATIVE EXTERNALITY, and have a marginal external cost function MEC = q.

Solve the followings:

a. Quantity maximizes NET benefits (hint: total social welfare).

b. Quantity under competitive equilibrium (hint: the externality is NOT accounted yet).

c. DWL (dead weight loss) under the EXTERNALITY under the competitive equilibrium (hint: the externality is NOT accounted).

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