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Micro 6.4-Correcting a Negative Externality

Last updated over 1 year ago

6 Nsɛmmisa

Akwankyerɛ

Assume the following graph represents some sort of market externality.

1

1

1

1

1

1

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1.

What type of externality is this? (Select all that apply)

Positive externality in consumption

Negative externality in consumption

Positive externality in production

Negative externality in production

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2.

Given this externality, the market price is too the market price.

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3.

At the private quantity,

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4.

What type of government policy should be used to correct this externality? (NO EXPLANATION! JUST ANSWER THE QUESTION!)

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5.

Provide 2 letters that represent your answer to #4. (More than one answer is possible, but I only want ONE pair of letters.)

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6.

Instead of your policy solution in #4, the government could use a . As a result, this would create a at quantity