>Public econ expenditure analytic questionsAnalytical question 2: Consider a factory which produces cars and generates air pollution as part of the production process. The air pollution has a negative effect on the health of people living nearby – each car produced causes $3 in health damages. The firm’s supply curve is given by QS=2P-10 and the firm faces the demand function QD=14-P . Consider the two graphs below (not drawn to scale). Which graph setup corresponds to this problem? Graph 1: Graph 2: Analytical question 2: b) Using the graph you chose in the previous question answer the following: What letter corresponds to the private equilibrium quantity? What letter corresponds to the socially efficient quantity? What letter corresponds to the supply curve? What letter corresponds to the private marginal cost curve? What letter corresponds to the demand curve? What letter corresponds to the private marginal benefit curve? What letter corresponds to the social marginal benefit curve? What letter corresponds to the social marginal cost curve? Analytical question 2: c) Solve for the private equilibrium quantity. Q=( ) answer the analytic questions. Analytical question 2: d) Solve for the socially efficient quantity. Q= Using the letters on the graph what is the area of deadweight loss? (e.g. “ABC”) f) Calculate the deadweight loss (in the private market). DWL= g) What is the optimal (Pigouvian) tax? h) Suppose instead that the marginal damages are given by MD(Q) = 3+(Q/2). Calculate the deadweight loss. What is the optimal (Pigouvian) tax? DWL = Pigouvian tax =