2. Tax should be $6 per unit.
3. The deadweight loss = 0.5[($12 - $6) * (800 - 500)] = $900
The fumes from dry cleaners can contribute to air pollution. Suppose the following diagram illustrates the...
4. In a market for dry cleaning, the inverse market demand function is given by P=160-10 and the (private) marginal cost of production for the aggregation of all dry dleaning firms is given by MC- 10+1Q. Finally, the pollution generated by the dry cleaning process creates external damages given by the marginal external cost curve MEC 1Q Calculate the output and price of dry cleaning if it is produced under competitive cond tions without regulation. The competitive equilbrium quanity is...