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Question: widgets are a necessary part of modern life but they...

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Widgets are a necessary part of modern life, but they are also associated with considerable pollution and pollution-related externalities. Consider the private market for widgets described by the following private marginal benefit (MB) and private marginal cost (PMC) curves:

𝑀𝑀𝑀𝑀 = 100 βˆ’ 0.15𝑄𝑑

PMC = 4 + 0.06𝑄𝑠.

where 𝑄𝑑 is the quantity demanded and 𝑄𝑠 is the quantity supplied. Assume here that output (𝑄𝑠 and 𝑄𝑑) varies from 0 to 1000. After plotting these curves, use them to answer the following

questions. (This question requires graphing for several partsβ€”you can put all of your curves on the same figure. At the very least, I would like for you to try using Excel to plot the lines.)

  1. ) (5 points) Solve for the optimal private level of production 𝑄M and the optimal private market clearing price PM and plot these values on your graph.

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