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z Medical Questions

Your Question
A firm\'s total costs \"c\" are c=4q^2 where q is the level of output. The firm\'s private marginal cost of production is then given by PMC=8q. It can sell any number of units of output at a price of 64. However, production inflicts damage on the firm\'s neighbors. The total damage \"D\" inflicted depends on the firm\'s output: D=4q+q^2. Therefore, the marginal damage is given by MD=4+2q. Assume that the neighbors have the property rights. Denote q (with no negotiation) to be the output produced when there is no negotiation and q(negotiation) to be the output produced when there is a negotiation between the firm and the neighbors. What are q(noneg) and q(neg)?

(a) q(noneg)=6 and q(neg)=8
(b) q(noneg)=8 and q(neg)=6
(c) q(noneg)=0 and q(neg)=6
(d) q(noneg)=6 and q(neg)=6

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