Government control and the associated deadweight loss

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The aluminum industry faces a private marginal cost curve PMC = Q and a market inverse-demand curve of PD = 20 – QD. However, production creates an externality with marginal damages of MD = 2. Graph the private marginal cost, the social marginal cost, the marginal damages, and the demand curve. Find the market equilibrium without any government control and the associated deadweight loss.

Reference no: EM13981054

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