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Suppose that demand for electricity is given by P(Q)=400-Q where Q is the quantity kilowatt hours...

Suppose that demand for electricity is given by

P(Q)=400-Q

where Q is the quantity kilowatt hours demanded and P is the price of electricity. The marginal private cost of electricity production is:

MC(Q)=100+.5Q

Assume that electricity production exposes an external cost on society of 30 per kWh. There are no marginal external benefits from the consumption or production of electricity.

1. Find the efficiency quantity of electricity

2. Find the efficient price per kWh of electricity

3. Calculate the deadweight loss that will arise in the absence of government intervention

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