Identify a positive externality in consumption via example, and if possible include a link to a...

Identify a positive externality in consumption via example, and if possible include a link to a source that is not contagious disease or education.

1. Identify the impacted markets, where the externality arises and who is impacted by the externality. Include a supply and demand graph in your posting.

2. Discuss the difference between the best outcome for society and the best outcome for the involved individuals.

3. Create two reasonable polices that may be enacted to encourage the market to ‘not fail’. I.e. what structures or incentives/penalties might the government put in place to lead the market toward a socially optimal outcome. Show the impacts of each of the two policies graphically – best to use a changed version of your graph from the above question.

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Expert Solution

Rahul Sunny answered 1 year ago

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