Calculate the market equilibrium

Reference no: EM131193671

Q. Consider a market where demand is P = 10 -2Q and supply is P = Q/2. There is a consumption positive externality of $2.50/unit of consumption.

a. Calculate the market equilibrium.

b. What is the social optimum quantity and price?

c. If the government user a tax to get produces to internalize their externality, what is the net price received by producers?

Reference no: EM131193671

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