1. We have the following inverse demand function: P(q) = 50 – 5q And the following cost function for a firm: C(q) = 5q+q² And the good produces an externality. The marginal damage of the good is: MD(q) = 5 Graph the MB, MC, MSC and Deadweight loss and calculate the size of the deadweight loss. Note for this question ensure the formulas are in the right form. i.e.

1. We have the following inverse demand function: P(q) = 50 – 5q And the following cost function for a firm: C(q) = 5q+q² And the good produces an externality. The marginal damage of the good is: MD(q) = 5 Graph the MB, MC, MSC and Deadweight loss and calculate the size of the deadweight loss. Note for this question ensure the formulas are in the right form. i.e.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter5: Difficult Cases For The Market And The Role Of Government

Section: Chapter Questions

Problem 5CQ

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