The Demand Curve and Supply Curve for a Good Are

Multiple Choice

The demand curve and supply curve for a good are given by Q^D = 100 - 5P and Q^S = 1.25P - 2.5. Suppose the production of this good generates a negative externality, where the external marginal cost is constant at $2. To achieve the socially optimal output level, the government wants to implement a quota. The size of the quota should be ____ units of the good.

A) 24
B) 20
C) 16
D) 14