The inverse demand for energy-efficient refrigerators is P = 2,000

Question

The inverse demand for energy-efficient refrigerators is P = 2,000 - 10Q, where Q measures refrigerators per month. The inverse supply of energy-efficient refrigerators is P = 10Q.
a. Solve for the market equilibrium price and quantity.
b. Suppose the use of an energy-efficient refrigerator reduces carbon dioxide emissions, generating an external marginal benefit of $100. What is the socially optimal quantity of energy-efficient refrigerators?

Quizplus · Accepted Answer

The Answer of The inverse demand for energy-efficient refrigerators is P = 2,000 - 10Q, where Q measures refrigerators per month. The inverse supply of energy-efficient refrigerators is P = 10Q.
a. Solve for the market equilibrium price and quantity.
b. Suppose the use of an energy-efficient refrigerator reduces carbon dioxide emissions, generating an external marginal benefit of $100. What is the socially optimal quantity of energy-efficient refrigerators?