Negative production externality

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Reference no: EM13859974

Suppose that demand for a product is Q = 1000 – P and supply is Q = 9P. Furthermore, suppose that the marginal external damage of this product is $20 per unit. Suppose this is a negative production externality.

Calculate the Q currently being produced in the private market.

Calculate the Q that is socially optimal.

Is the market currently over- or under producing this good? By how much?

Calculate the deadweight loss associated with the externality.

Reference no: EM13859974

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