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Suppose demand is QD = 16 - P supply is QS = P. There is a...

Suppose demand is QD = 16 - P supply is QS = P. There is a constant positive externality of $4 per unit (Marginal External Benefit, MEB = $4). a. Draw the graph of the MC, MB and MSB curves. Identify the level of the intercepts. b. Calculate total surplus if the market is at the point where MC=MB. c. What is the DWL loss at this point (MC=MB)? Identify on your graph. d. Calculate total surplus if the market is at the point where MC=MSB.

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