1. Business
  2. Economics
  3. 3 count von count likes to loudly count passing cars...

Question: 3 count von count likes to loudly count passing cars...

Question details

3. Count von Count likes to (loudly) count passing cars next to Oscars home. This creates a negative externality via noise pollution that irritates Oscar. The marginal private cost of counting is 40, and marginal damage is given by 2Q, so: MPC 40 MD 2Q a) Explain why the existence of externalities can be considered a market failure. b) lgnoring the externality, find the privately optimal quantity (Qo) of counting if the marginal benefit is given by: MB 60 2Q. Assume Q is in terms of hours a week. c) What is the equation for marginal social cost (MSC)? d) Find the socially optimal quantity of hours of car counting (Q*)

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution