Multiple Choice
The market for toilet paper is characterized by the following inverse demand and supply equations:
P = 100 - Q
P = MC = 2Q - 197.3
Where P is the price per roll of toilet paper and Q measures millions of rolls of toilet paper. The external marginal cost is 30 cents for each roll of toilet paper produced. The socially optimal price of toilet paper is _____ cents higher than the price under perfect competition.
A) 40
B) 30
C) 20
D) 10
Correct Answer:
Verified
Correct Answer:
Verified
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