Micro economics questionNeed solution Suppose the equation for the demand curve in a market is P = 120-(1/5)Q, and the equation for the supply curvein the same market is P = (1/10)Q.Suppose there is an external cost of $12 associated with the production of each unit of the good. Whatparticular tax or subsidy would move the market to the social optimum?What are the socially optimal quantity and price?Suppose there is an external cost of $12 associated with the production of each unit of thegood. What are the socially optimal quantity and price?D 1080-acer

Ans 1- Social optimum quantity is the situation where its marginal social benefit is equal to…

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What are the socially optimal quantity and price?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

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Micro economics question Need solution

Suppose the equation for the demand curve in a market is P = 120-(1/5)Q, and the equation for the supply curve
in the same market is P = (1/10)Q.
Suppose there is an external cost of $12 associated with the production of each unit of the good. What
particular tax or subsidy would move the market to the social optimum?
What are the socially optimal quantity and price?
Suppose there is an external cost of $12 associated with the production of each unit of the
good. What are the socially optimal quantity and price?
D 1080-
acer

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