Find the competitive price and quantity of paper

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Reference no: EM13190845

The supply of paper is given by the following equation: Qs = 5,000P and the demand for paper is given by: Qd = 400,000 - 1,000P. The Q's are in tons. There is pollution associated with the production of paper causing marginal external damages of $20 per ton.

a. Find the competitive price and quantity of paper
b. Determine the efficient level of paper production.
c. Devise a corrective (Pigouvian) tax to that would achieve efficiency under competition.

Reference no: EM13190845

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