Question

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 Enter youw response rounded to two decimal places.) The competitive equilibrium price is $ Enter your response rounded to two decimal places.) Determine the socially efficient price and output of dry cleaning. The socially efficient quantity is The socially efficient price is $ Enter your response rounded to two decimal p iaces.) (Enter your response rounded to two decimar places.) Determine the tax that would result in a competitive market producing the socially efficient output. A tax of $ per unit would result in the competitive market producing the socially efficient output. (Enter your response rounded to two decimal places) Calculate the output and price of dry cleaning if it is produced under monopolistic conditions without regulation The monopoly's profit-maximizing quantity is The profit-maximizing price is $ Enter your response rounded to two decimal places.) Enter your response rounded to two decimal places.) Determine the tax that would result in a monopolistic market producing the socially efficient output. A tax of $ per unit would result in the monopoly producing the socially efficient output. (Enter your response rounded to two decimal places.) Assuming that no attempt is made to monitor or regulate pollution, which market structure yields higher social welfare? Discuss. Higher social welfare is achieved by the O A monopoly because the monopoly produces less output O B. competitive equilibrium because competition results in more output O c. competitive equilibrium because competition results in less output. O D. monopoly because the monopoly generates no extemality. O E. competitive equilibrium because competition results in higher prices.