Q5. Assume that notebook paper is sold in a perfectly competitive industry. The industry's short-run supply curve (or ma

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Q5. Assume that notebook paper is sold in a perfectly competitive industry. The industry's short-run supply curve (or ma

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Q5 Assume That Notebook Paper Is Sold In A Perfectly Competitive Industry The Industry S Short Run Supply Curve Or Ma 1
Q5 Assume That Notebook Paper Is Sold In A Perfectly Competitive Industry The Industry S Short Run Supply Curve Or Ma 1 (213.64 KiB) Viewed 28 times
Q5. Assume that notebook paper is sold in a perfectly competitive industry. The industry's short-run supply curve (or marginal cost curve) is P = MC = 2Q, where Q is measured in millions of reams per year. The inverse demand for notebook paper is P = 40 - 8Q. a. What are the equilibrium market price and quantity sold? (5 marks) b. Suppose that in their production process, paper manufacturers have been dumping waste in nearby streams. The external marginal cost is estimated to be $0.50 for each ream produced. Calculate the socially optimal level of output and price for the paper industry. (5 marks)
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