Graph the following supply and demand curve

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Graph the following supply and demand curve:
Supply: P = 10 + .4Q
Demand: P = 50 – .4Q 

What is the equilibrium price and quantity? 

  1. a.      Suppose production of the good in question creates a negative externality equal to $8 per unit. Draw a new supply curve that represents the marginal cost to society. What is the socially optimal price and quantity? 
  2. b.      Calculate the net benefit to society if the government imposes a pollution tax of $8 per unit.
  • 12 years ago
Graph the following supply and demand curve
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