Essay
Scenario 10-3
Suppose the equation for the demand curve in a market is P = 120 - (1/5) QD , where QD is the quantity demanded and is the price. Also, suppose the equation for the supply curve in the same market is P = (1/10) QS , where QS 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?
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A tax of $12 per uni...View Answer
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