Multiple Choice
The market for wheat is characterized by the following inverse demand and supply equations:
P = 540 - 1.5Q
P = MC = 3Q
Where P is the price per metric ton of wheat and Q measures the daily quantity of wheat in metric tons. Because of fertilizer runoff, the external marginal cost is constant at $90 per metric ton of wheat. What is the socially optimal quantity of wheat?
A) 80 metric tons
B) 360 metric tons
C) 100 metric tons
D) 240 metric tons
Correct Answer:
Verified
Correct Answer:
Verified
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