Question 3 = (a) Suppose the supply and demand functions of a good is given by P = 80+ 0.2Q and P 300 -0.2Q, where P is the price in dollars and Q is the quantity. It is discovered that the production of this good imposes $20 of cost per unit to external parties. Analyse the efficiency in this market, compute the market equilibrium quantity and the social optimal quantity and the deadweight loss (if any). Support your answers with a suitable market diagram. Discuss one (1) method which can rectify the issue in the market. (9 marks) (b) Consider 2 consumers A and B of a product with individual demand functions QA 400-5PA and QB = 300 - 2PB, respectively. (i) If the product is a private good, analyse the market and solve for the optimal quantity if the marginal cost is $10. How will your answer be different if the marginal cost is $90? ECO202 Copyright 2022 Singapore University of Social Sciences (SUSS) TOA - July Semester 2022 (8 marks) Page 4 of 6 (ii) If the product is a public good, analyse the market and solve for the optimal quantity if the marginal cost is $10? How will your answer be different if the marginal cost is $90? (8 marks)