Suppose the market demand for a good takes the form: 1 QD = 120 4 - P and market supply takes the form: Qs = - 30 + Suppose now, that each unit consumed adds an additional 50% of value that is external. What is the efficient (or socially-optimal) quantity in this market?

Suppose the market demand for a good takes the form: 1 QD = 120 4 - P and market supply takes the form: Qs = - 30 + Suppose now, that each unit consumed adds an additional 50% of value that is external. What is the efficient (or socially-optimal) quantity in this market?

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter5: Difficult Cases For The Market And The Role Of Government

Section: Chapter Questions

Problem 10CQ

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Question

Economic

Suppose the market demand for a
good takes the form:
1
Qo = 120 -P
4
and market supply takes the form:
Qs = - 30 +
Suppose now, that each unit consumed adds an
additional 50% of value that is external. What is
the efficient (or socially-optimal) quantity in this
market?

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