Question

Explain why, in a market with negative externality, too much output (more than the efficient amount) is
produced and sold and positive externality, too little output (less than the efficient amount) is produced and
sold. If you use a diagram in your answer, make that diagram large and label all axes, curves, and points.

Answer 1

On the other Side, there ave exTernalitie positite spiliover offets beyond the cvectd of azleonaity which have qoeatea maaginel bneft the sodeły than the indiuidual. Thes e ave cale poci ive exteanalities. These inlude educaton Spiloues etc. teonomic agfr do ndl compave Social benefts of theis actions and his esuls in o tittle preduction at &i than the elficient oeilto To encourage theis pooduch on Subsider ase poov twhich incoeases troduchon. Jedh s ase povided

costs and benel MPB MSC MPct MPC iaun Dollaes MPC Pt P2 MPB4 subady MPB e u Qucanti hy