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Homework answers / question archive / In a market for dry cleaning, the inverse market demand function is given by P=100-Q and the (private) marginal cost of production of all dry cleaning firms is MC=10+Q

In a market for dry cleaning, the inverse market demand function is given by P=100-Q and the (private) marginal cost of production of all dry cleaning firms is MC=10+Q

Economics

In a market for dry cleaning, the inverse market demand function is given by P=100-Q and the (private) marginal cost of production of all dry cleaning firms is MC=10+Q. Finally, the pollution generated by the dry cleaning process creates external damages given by the marginal external cost curve MEC=Q
(a) Calculate the output and price of dry cleaning if it is produced under competitive conditions without regulation
(B) determine the socially efficient (optimal) price and output of dry cleaning
(C) If your answers in (a) and (B) are different, explain the source of the difference in not more than three sentences
(D) calculate the cost to society of allowing the dry cleaning market to operate unregulated

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