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    Internal and External Marginal Cost

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    I need help with the following problem.

    I have a) Q= 5.625, b) Q= 8.18 but I am not sure about c . Please solve for a-d ans show your work so that I can compare with what I can up with.


    The the external MC of pollution is MCexternal = 5Q and the internal marginal cost is MCinternal = 10Q.

    Further, assume the inverse demand for the product, Q, is p = 90-Q . For the following questions calculate your answers to two decimal points.

    a. What is the socially efficient level of output?

    b. How much output would a competitive industry produce?

    c. How much output would a monopoly produce?

    d. What ways can government induce firms to produce the socially efficient level of output.

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    Solution Summary

    This solution provides steps necessary to determine the internal and external marginal cost.