You are an industry analyst that specializes in an industry where the market inverse demand is P = 200 – 3Q.
The external marginal cost of producing the product is MCExternal = 9Q, and the internal cost is MCInternal = 16Q.
What is the socially efficient level of output?
Given these costs and market demand, how much output would a competitive industry produce?
Given these costs and market demand, how much output would a monopolist produce?
Which of the following are actions the government could take to induce firms in this industry to produce the socially efficient level of output.
- Pollution permits
- unanswered
- Pollution taxes
- unanswered
- Nonrival consumption
