Question

An economy has three firms: X, Y and Z. Every unit of output that X produces creates a benefit of INR 700 for Y and a cost of INR 300 for Z. Firm X’s cost curve is
$𝐶(𝑄_𝑋) = 2𝑄^2_X + 10$
where 𝐶 represents cost and 𝑄𝑋 is the output. The market price for the output of X is INR 1600 per unit. The difference between the socially optimal output and private profit maximizing output of firm X (in INR) is _____ (in integer).

Answer 1

The correct answer is: 100 or 160,000(approx.)