Negative production externality: Supply curve , Demand curve , where is price per unit and is quantity. If marginal external cost is , then the socially efficient equilibrium price is ________ (rounded off to two decimal places).
IIT JAM 2026 Question 54: Market failure, externalities and public goods
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Negative production externality: Supply curve P=15+0.08Q, Demand curve P=40-0.15Q, where P is price per unit and Q is quantity. If marginal external cost is 0.06Q, then the socially efficient equilibrium price is (*rounded off to two decimal places*).
Market failure, externalities and public goods has come up 114 times in 7 exams since 2006.
What this question tests
This question is on Externalities and the social optimum, part of Market failure, externalities and public goods in Microeconomics.
Costs or benefits that fall on others, and why the private and socially efficient outputs differ.
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