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Homework answers / question archive / The following table shows the private value, private cost, and external cost for various quantities of output in a market
The following table shows the private value, private cost, and external cost for various quantities of output in a market.
| Quantity | Private value | Private cost | External cost |
| 1 | $14 | $10 | $2 |
| 2 | 13 | 11 | 2 |
| 3 | 12 | 12 | 2 |
| 4 | 11 | 13 | 2 |
| 5 | 10 | 14 | 2 |
| 6 | 9 | 15 | 2 |
| 7 | 8 | 16 | 2 |
a) What is the competitive equilibrium (PP and QQ) in this market (i.e. the equilibrium) with no government intervention?
b) What is the socially optimal equilibrium (PP and QQ)?
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