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Question

Assume that the market for sriracha sauce can be represented by the following supply and demand

equations:

P=Qs/10

P=10-QD/10

The production of each bottle of sriracha sauce creates an external cost of $3 so that the Marginal Social Cost of sriracha production is given by

  P=3 + Qs/10

 

Find the socially optimal output in this market.

(please explain work thanks!!)

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