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Generate the socially efficient level of the good

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Reference no: EM131514067

Suppose that the demand for a chemical is given by Q = 100 - 2P, where quantity is measured in pounds. The market supply is given by MC = 5. Assume that the marginal external damage of this product is $3 per unit.

 

Part A: What is the equilibrium price and quantity of this good without government intervention?

Part B: What level of taxation would generate the socially efficient level of the good?

Reference no: EM131514067

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