Home / Questions / External Cost Suppose the external marginal cost of pollution is MCext 5Q and the intern...
External Cost
Suppose the external marginal cost of pollution is MCext =
5Q and the internal marginal cost is MCint = 10Q Further, assume the inverse
demand for the product, Q, is given by P = 90-Q
a What is the socially efficient level of output?
b How much output would a competitive industry produce?
c How much output would a monopoly produce?
d Discuss three ways government can induce firms to produce
the socially efficient level of output
Mar 16 2020 View more View Less
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