4. Answer all parts. (a) Describe what is meant by an “externality”. (b) Give an example...

4. Answer all parts. (a) Describe what is meant by an “externality”. (b) Give an example of one positive and one negative externality. (c) In the case of a negative production externality, use a diagram to illustrate how this externality relates to the market equilibrium. (d) Building on your answer to (c), explain how a corrective tax can improve upon the market outcome.

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Rahul Sunny answered 5 days ago

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