Suppose that you have an inverse demand curve (Pd = a bQd) with an intercept of 15 and a slope coefficient of 3. Ps = c + dQs, where c = 1 and d = 1. There is also a 110% externality on the production of the good i.e. it costs socialy 110% on top of what it costs the firm to make a given unit, so our MSC will have intercept and slope terms that are 110% larger than those on the inverse supply curve.
What is the market equilibrium quantity?
a) 2
b) 3
c) 4
d) 5