Micro 6.4-Correcting a Negative Externality - Michael Burbine | Library

Instructions

Assume the following graph represents some sort of market externality.

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

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Given this externality, the market price is too __________, so the goal of the government should be to __________the market price.

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At the private quantity, __________, __________

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

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