A market demand curve reflects the

A. Sum of private and social benefits of consuming a product.

B. External benefits of consuming a product.

C. Private benefits of consuming a product.

D. Social benefits of consuming a product.

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Prachi DabasLv10

11 Oct 2020

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Suppose that demand for a product is Q=140-6P and supply is Q=2P-20. Furthermore, suppose that the marginal external damage of consuming this product is $4 per unit. Does it result in underconsumption? Or overconsumption? How many more or less units of this product will the free market produce than is socially optimal? Calculate the deadweight loss associated with the externality.

Suppose that demand for a product is Q=140-6P and supply is Q=2P-20. Furthermore, suppose that the marginal external damage of consuming this product is $4 per unit.

Does it result in under-consumption? Or over-consumption? How many more or less units of this product will the free market produce than is socially optimal? Calculate the deadweight loss associated with the externality.