Suppose that the production of a good produces a negative externality resulting in higher marginal social costs (MSC) than marginal private costs (MPC).Suppose MPC=10+Q and MSC=10+1.5Q and Demand is P=100-Q.
-What is the social equilibrium quantity and price?

Question

Quizplus · Accepted Answer

To find the social equilibrium quantity and price, we need to find the intersection of MSC and Demand. 
10+1.5Q = 100-Q 
Solving for Q, we get Q = 36. 
To find the price, we plug in Q=36 into the demand equation: P = 100-36 = 64. 
Therefore, the social equilibrium quantity is 36 and the price is 64. Option B is the correct answer.

Suppose That the Production of a Good Produces a Negative