An environmental economic consulting firm is hired to measure the negative externalities associated with the pollution from an industry.The consultants calculate the marginal social cost of production to be MSC = 2Q+30 and the marginal private cost of production to be
+30.The market demand curve for the industry can be expressed as P = 60-Q.If the industry currently does not take into account the negative externality in its supply decisions,the industry is ________________ by _____________ units relative to the social optimum.
A) under-producing; 5
B) over-producing; 5
C) under-producing; 8
D) over-producing; 8
Correct Answer:
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