Unformatted text preview: . Her
supply curve is given by MC = P = Q, where Q is the quantity supplied (in bushels) and P is the price.
The market price is $24 per bushel. Unbeknownst to Erica, her neighborhood reeks of garlic due to her
garden. Her neighbors are pleasant Milwaukeean’s and don't complain, though they suffer as a result of
her garden. The marginal external costs are constant: MEC = 4.
A) How much does Erica harvest in
equilibrium?
P = 24 = Q S
B) What is the Social Marginal Cost curve?
(give the equation)
SMC = 4 + QS
C) What is the sociallyoptimal amount of
garlic produced by Er...
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 Spring '08
 Mcginty,M
 Environmental Economics, Public Good, Supply And Demand, Market failure, Externality, Erica harvest

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