The demand for cigarettes is given by P = 500 -.2Q. Cigarettes are manufactured at a constant marginal cost of 50 and sold in a competitive market. a. What is the quantity of cigarettes sold in...

The demand for cigarettes is given by P = 500 -.2Q. Cigarettes are manufactured at a constant marginal cost of 50 and sold in a competitive market.

a. What is the quantity of cigarettes sold in equilibrium?

b. If cigarettes generate a marginal external cost of

MEC = .1Q, what is the socially optimal level of cigarettes?

c. Draw a diagram illustrating the private and social

MC curves and the demand curve. Point out the private market quantity, the socially optimal quantity, and the social welfare cost.