Determine socially efficient level of output

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Reference no: EM1372219

Assume the external marginal cost of pollution is MCext=5Q and internal marginal cost is MCint=10Q. Further, suppose the inverse demand for the product, Q, is given by P = 90-Q .

a. What is the socially efficient level of output?

b. How much output would a competitive industry produce?

c. How much output would a monopoly produce?

d. Discuss three ways government can induce firms to produce the socially efficient level of output.

Reference no: EM1372219

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