Uue uale
suppose the demand for standard household air freshener in the us is qa=100-
25p where qa is monthly quantity demanded in millions and p is the price per unit
in dollars and cents. suppose the marginal private cost (mpc) of producing air
freshener is one dollar.
illustrate in a diagram and calculate the market equilibrium quantity (the
supply curve is horizontal).
explain what a marginal private cost of one dollar means. does that mean
the total cost of producing air freshener is unrelated to how many are
produced?
assume that the marginal private benefit (mpb) of air freshener equals the
marginal social benefit (msb). explain what that means.
explain why following the statement is incorrect: "at the equilibrium
calculated in part a, every purchaser of air freshener was willing to pay
exactly one dollar for the good".