Determine the socially efficient price and output of paper To find the socially efficient solution,we need to consider the external costs,as as v ell as the privat s given by Rewriting the supply curve,the private costs are P=0.0005Qs-20=MC.Therefore, MSC=MC+MEC=0.0005Qs-20+0.0006Qs MSC=0.0011Qs-20. Setting the marginal social cost equal to the demand curve,or the marginal benefit, 0.0011Q-20=80-0.0005Q Q=62,500 lots of 100 Ib.each P=$48.75 per 100 Ib.lot. Explain clearly why the answers you calculated in parts a and b differ The equilibrium quantity declined and the equilibrium price rose in part b because Igno ring ome of the st will result in too much output being produced and sold at too low of price. 7.In a market for dry cleaning,the inverse market demand function is given by and the (private)marginal cost of production for the aggre gation of all dry cleaning firms is given by Finally,the pollution generated by the dry cleaning creates external damages given by the marginal external cost curve Calculate the output and price of dry cleaning if it is produced under competitive conditions absent regulation. To find the answer,set price equal to marginal cost: 100-Q=10+Q. Q=45.and P=55 Determine the socially efficient price and output of dry cleaning. To find the answer here.we must first calculate the marginal social cost (MSC),which is equal to the marginal external cost plus the private marginal cost. Next.set MSC equal to the market demand functiont solve for price and quantity.When all costs are included,the quantity produced will fall and the price will rise: MSC=MC+MEC=10+2Q=100-Q Q=30.andP=70. Determine the tax that would result in a competitive market producing the socially efficient output.b. Determine the socially efficient price and output of paper. To find the socially efficient solution, we need to consider the external costs, as given by , as well as the private costs, as given by Rewriting the supply curve, the private costs are P=0.0005QS-20=MC. Therefore, MSC=MC+MEC=0.0005QS-20+0.0006QS MSC=0.0011QS-20. Setting the marginal social cost equal to the demand curve, or the marginal benefit, 0.0011Q-20=80-0.0005Q Q=62,500 lots of 100 lb. each. P=$48.75 per 100 lb. lot. c. Explain clearly why the answers you calculated in parts a and b differ. The equilibrium quantity declined and the equilibrium price rose in part b because the external costs were considered. Ignoring some of the costs will result in too much output being produced and sold at too low of a price. 7. In a market for dry cleaning, the inverse market demand function is given by and the (private) marginal cost of production for the aggregation of all dry cleaning firms is given by . Finally, the pollution generated by the dry cleaning process creates external damages given by the marginal external cost curve . a. Calculate the output and price of dry cleaning if it is produced under competitive conditions absent regulation. To find the answer, set price equal to marginal cost: 100-Q=10+Q, Q=45, and P=55. b. Determine the socially efficient price and output of dry cleaning. To find the answer here, we must first calculate the marginal social cost (MSC), which is equal to the marginal external cost plus the private marginal cost. Next, set MSC equal to the market demand function to solve for price and quantity. When all costs are included, the quantity produced will fall and the price will rise: MSC=MC+MEC=10+2Q=100-Q, Q=30, and P=70. c. Determine the tax that would result in a competitive market producing the socially efficient output