Question 4. [Total 18 points] Suppose the private MC curve of boom box rentals is given by P = 5 + 0.1Q, where P is the

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Question 4 Total 18 Points Suppose The Private Mc Curve Of Boom Box Rentals Is Given By P 5 0 1q Where P Is The 1 (67.06 KiB) Viewed 36 times

Question 4. [Total 18 points] Suppose the private MC curve of boom box rentals is given by P = 5 + 0.1Q, where P is the daily rent per unit in dollars and Q is the number of hours rented per day. The private MB curve for boom boxes is 20 -0.2Q. (a) [12 points] If each boom box imposes $3 per day in noise costs on others, by how much will the privately optimal hours of boom box rental exceed the socially optimal hours? (b) [6 points] How would the imposition of a tax of $3 per unit on each daily boom box rental affect efficiency (total economic surplus) in this market?