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A textile company emits pollution near a wetland and environmental damage and human health are not considered in the private market related to the company. Suppose you are an environmental economist who is analyzing the following marginal costs and benefits of this market, where Q is in thousands of dollars and P is the price per pound. In addition, BME is the external marginal benefit and CME is external marginal cost.
BMP = 800 -0.5Q
BME = 0
CMP = 20 + 0.3 Q
CME = 0.4Q
Find the competitive equilibrium (Qc and Pc) and the efficiency equilibrium (Qe and Pe).
You are the project executive of a monopolistically competitive firm. The present demand curve is P=100- 4 Q. Your total cost equation is C(Q)=50+8.5Q^2 , and MC = 17Q. What level of output should you set to maximize profits?
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find out generalized least squares estimates of the relevant function(s). Illustrate what is the profit-maximizing level of output suggested by the results in part (f).
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