What is the equilibrium price quantity pair

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Reference no: EM133341587

Question: Market structure and externalities. The inverse demand curve is given as p=92-q. The supply curve is p=20+3q.

a. What is the equilibrium price quantity pair if the market structure is perfectly competitive?

b. If there is a marginal externality generated by production of the good equal to 4*q (MCE=4*q), what is the socially optimal price quantity pair?

c. What size specific tax τ placed on producers can be used to replicate the socially optimal outcome?

d. What is the value of the deadweight loss of the perfectly competitive outcome compared to the socially optimal outcome?

Reference no: EM133341587

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