2. Hog farms produce vast amounts of manure that can seriously threaten human health and

ecosystems. Suppose that the (inverse) demand for pork is given by PD = 100 - 0.5q, where q is

the quantity of pork produced [in tons] and the [inverse] supply of pork is given by P5 = q.

Further, suppose that the marginal external cost of each ton of pork is equal to $30. a. Calculate the quantity of pork that the unregulated market will produce.

in. Calculate the socially optimal quantity of pork. How does it compare to the unregulated market

equilibrium? Calculate the deadweight loss resulting from this externality. d. What is the total cost of the externality [total cost of the damage caused by pollution] at the

socially optimal level of output? Why is it not zero? P '1 Cnnnncn urnnr- nr‘nFnccnr again-n:- a rn-nnn nrninrl- Fnr- Hun rnurcn