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rket for good Q is perfectly competitive. However, it features positive externalities. ners' marginal private benefit is MB = 100-Q ers' marginal cost is MC = Q. sumption of this good generates a marginal external benefit MEB=2. e equilibrium of this market, the perfect competition quantity is QPC=

rket for good Q is perfectly competitive. However, it features positive externalities. ners' marginal private benefit is MB = 100-Q ers' marginal cost is MC = Q. sumption of this good generates a marginal external benefit MEB=2. e equilibrium of this market, the perfect competition quantity is QPC=

Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 8QP
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QUESTION 9 The market for good Q is perfectly competitive. However, it features positive externalities. Consumers' marginal private benefit is MB = 100-Q Producers' marginal cost is MC = Q. The consumption of this good generates a marginal external benefit MEB=2. a) In the equilibrium of this market, the perfect competition quantity is QPC= b) The socially efficient quantity is QSOC= c) To achieve efficiency, the government can introduce a
Transcribed Image Text:QUESTION 9 The market for good Q is perfectly competitive. However, it features positive externalities. Consumers' marginal private benefit is MB = 100-Q Producers' marginal cost is MC = Q. The consumption of this good generates a marginal external benefit MEB=2. a) In the equilibrium of this market, the perfect competition quantity is QPC= b) The socially efficient quantity is QSOC= c) To achieve efficiency, the government can introduce a
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The equilibrium output occurs where the demand and supply are equal. The equilibrium condition : 

MB = MC.

 

 

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