Scenario 10-3

Suppose the equation for the demand curve in a market is P = 120 - (1/5) Q D , where Q D is the quantity demanded and $P$ is the price. Also, suppose the equation for the supply curve in the same market is P = (1/10) Q S , where Q S is the quantity supplied.
-Refer to Scenario 10-3. Suppose there is an external cost of $12 associated with the production of each unit of the good. What particular tax or subsidy would move the market to the social optimum?

Question

Scenario 10-3
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Suppose the equation for the demand curve in a market is P = 120 - (1/5) Q D , where Q D is the quantity demanded and $P$ is the price. Also, suppose the equation for the supply curve in the same market is P = (1/10) Q S , where Q S is the quantity supplied.
-Refer to Scenario 10-3. Suppose there is an external cost of $12 associated with the production of each unit of the good. What particular tax or subsidy would move the market to the social optimum?

Quizplus · Accepted Answer

The Answer of Scenario 10-3
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Suppose the equation for the demand curve in a market is P = 120 - (1/5) Q D , where Q D is the quantity demanded and $P$ is the price. Also, suppose the equation for the supply curve in the same market is P = (1/10) Q S , where Q S is the quantity supplied.
-Refer to Scenario 10-3. Suppose there is an external cost of $12 associated with the production of each unit of the good. What particular tax or subsidy would move the market to the social optimum?

Scenario 10-3 ​ Suppose the Equation for the Demand Curve PPP

Scenario 10-3

Suppose the Equation for the Demand Curve $P$