Recreation centers offer a place for young people to play sports and engage in other activities at a marginal cost of MC = 0.25Q. The inverse demand curve for recreation centers is given by P = 10 - 0.25Q, where P is the price of entry and Q measures hundreds of entrants. Recreation centers generate positive externalities because they help get young people off the street and engaged in productive activities. The external marginal benefits are EMB = 1 + 0.06Q. The social demand curve for recreation centers can be expressed as ____.
A) P = 12 - 0.25Q
B) P = 11 - 0.25Q
C) P = 10 - 0.19Q
D) P = 11 - 0.19Q
Correct Answer:
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