Problem
Your local dry cleaner, Bleached Brite, is willing to launder shirts at its cost of $1.00 per shirt. The neighbourhood demand for this service is P = 5-0.005Q.
(a) Illustrate and compute the market equilibrium.
(b) Suppose that, for each shirt, Bleached Brite emits chemicals into the local environment that cause $0.25 damage per shirt. This means the full cost of each shirt is $1.25. Calculate the socially optimal number of shirts to be cleaned.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.