Suppose the marginal social cost of television sets is $100. This is constant and equal to the average cost of television sets. The annual demand for television sets is given by the following equation: Q = 200,000 - 500P
a. If television sets are sold in a perfectly competitive market, calculate the annual number sold. Under what circumstances will the market equilibrium be efficient?
b. Calculate the losses in well-being each year that would result from a law limiting sales of television sets to 100,000 per year.
c. Calculate the net loss in well-being that will result from a complete ban on television sets.
d. Draw a graph depicting the situtation described in this problem.