The market for a particular chemical, called Negext, is described by the following equations:
The market for a particular chemical, called Negext, is described by the following equations:
Demand: Qd=100-5P
Supply:Qs=5P
For each unit of negext produced, 4 units of pollution are emitted, and each unit of pollution imposes a cost on society of $1. Suppose that the government restrict emission to 100 units of pollution. Graph the Negext market under this contraint. find the new equilibrium price and quantity and show them on your graph.compute how this policy affects consumer surplus, producer surplus and the cost of pollution.
