The market for plasticans is perfectly competitive. Market Supply is given by Q=4P and Market Demand is given by Q=368-2P. Each extra unit of plastican produced creates a positive externality of $5. What is the efficient quantity?

Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter11: Public Goods And Common Resources
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The market for plasticans is perfectly competitive. Market Supply is given
by Q=4P and Market Demand is given by Q=368-2P. Each extra unit of
plastican produced creates a positive externality of $5. What is the
efficient quantity?

Efficient quantity is determined by setting Marginal Social Costs
(=Marg. Pvt. Cost + Marg. External Cost.) equal to Marg. Social
Cost=MWTP which is captured by the Demand curve

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