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Socially optimal level of output

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Reference no: EM131159987

The inverse market demand curve for a certain commodity is p = 85 - 10Q, and costs to a single firm of producing it are C(q) = 120 + 25q.

  1. Show that it is socially desirable that a certain quantity of the commodity is produced, but that no firm is willing to provide it.
  2. How might the government insure that the socially optimal level of output is provided?

Reference no: EM131159987

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