Suppose the external marginal cost of producing steel is MCExternal = 3Q and the internal marginal cost is MCInternal = 6Q The inverse demand for steel is given by P = 100 – Q. 1.What is the socially efficient level of output? 2. How much output would a competitive industry produce? 3. How much output would a monopoly produce?

Suppose the external marginal cost of producing steel is MCExternal = 3Q and the internal marginal cost is MCInternal = 6Q The inverse demand for steel is given by P = 100 – Q. 1.What is the socially efficient level of output? 2. How much output would a competitive industry produce? 3. How much output would a monopoly produce?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.5P

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