What is the market clearing equilibrium price and quantity

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An important way to reduce water pollution from farms is to plant a buffer zone of bushes between crops and the water. Economists estimate that for each bush planted there is a $20 gain in reduced pollution. Market supply and demand curve for the bushes are given below; price; $50, $40, $30, $20, $10. Demand; 1000, 2000, 3000, 4000, 5000. Supply 5000, 4000, 3000 2000, 1000. What is the market clearing equilibrium price and quantity? What is the efficient quantity? How would Pigou propose correcting this inefficiency? Draw a diagram illustrating your answer.

Reference no: EM131242530

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