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Efficient equilibrium prices and quantities exchanged

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Reference no: EM131893522

Suppose that both the chemical and eyeglass industries in New Jersey are perfectly competitive. Emissions from the chemical industry, however, leaves particles on the grinding equipment used for making glasses that must constantly be removed. Hence chemical production raises the cost to produce eyeglasses.

Using graphical analysis, show why market forces in these two markets will not achieve efficient equilibrium prices and quantities exchanged in the market.

Reference no: EM131893522

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