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Suppose That the Production of a Good Produces a Negative

Question 9

Multiple Choice

Suppose that the production of a good produces a negative externality resulting in higher marginal social costs (MSC) than marginal private costs (MPC) .Suppose MPC=10+Q and MSC=10+1.5Q and Demand is P=100-Q.
-What is the social equilibrium quantity and price?


A) Q = 45, P = 55
B) Q = 36, P = 64
C) Q = 55, P = 65
D) Q = 35, P = 45

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