Table 12.12, shows the supply and demand conditions for a firm that will play trumpets
Chapter 12, Problem 42(choose chapter or problem)
Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. Qs1 is the quantity supplied without social costs. Qs2 is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when only private costs are taken into account, and then when social costs are taken into account. How does taking the externality into account affect the equilibrium price and quantity? P Qd Qs1 Qs2 $20 0 10 8 Table 12.12 P Qd Qs1 Qs2 $18 1 9 7 $15 2.5 7.5 5.5 $12 4 6 4 $10 5 5 3 $5 7.5 2.5 0.5 Table 12.12
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