Imagine a market where there is a positive externality in production. The private (and social) inverse demand function for the good is: D_private: P_D = 22 - 1.5Q_D. The private inverse supply function is: S_private: P_S = 8 + 0.5Q_S. The social inverse supply function that accounts for the positive externality in production is: S_social: P_S = 2 + 0.5Q_S. What is the deadweight loss from the externality?

Imagine a market where there is a positive externality in production. The private (and social) inverse demand function for the good is: D_private: P_D = 22 - 1.5Q_D. The private inverse supply function is: S_private: P_S = 8 + 0.5Q_S. The social inverse supply function that accounts for the positive externality in production is: S_social: P_S = 2 + 0.5Q_S. What is the deadweight loss from the externality?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section10.1: Externalities And Market Inefficiency

Problem 1QQ

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