Question

Paraphrase this please!!

Positive externalities lead to underproduction. Jon does not compensate Bob for the benefit of having pollinating bees nearby, so Bob produces less honey than is socially optimal. The tax on Bob’s production makes this distortion even worse by reducing production even further. Because the cost of deadweight loss increase at an increasing rate, this additional distortion is greater than if there had been no preexisting externality. In figure below, a tax on producer shifts supply from S₁ to S₂ in both cases. However, the same tax generates larger deadweight loss when positive externality distorts the market.  

A tax imposed on production that generates a negative externality corrects some of the inefficiency associated with the externality: not only is the deadweight loss not increased by the tax, but the tax offsets some of the preexisting inefficiency. Because Bob is not bearing the full cost of his production in the absence of the tax, he is overproducing honey. The tax will cause him to reduce production, so some of the negative externality will be corrected. In figure below, when negative production externalities exists, initial production takes place at Q₀ while socially efficient production is Q_1.   Overproduction generates deadweight loss of DEF. A tax decreases supply to SMC (supply that represents social marginal costs) and eliminates the deadweight loss triangle that existed before the tax. The same tax in markets with no negative externalities creates deadweight loss of ABC.

Answer 1

Positive externalities prompt underproduction. Jon does not remunerate Bounce for the advantage of having pollinating honey bees close-by, so Sway creates less nectar than is socially ideal. The duty on Weave's creation aggravates this bending even by lessening generation considerably further. Since the cost of deadweight misfortune increment at an expanding rate, this extra contortion is more noteworthy than if there had been no previous externality. In figure underneath, an assessment on maker shifts supply from S1 to S2 in the two cases. Be that as it may, a similar assessment creates bigger deadweight misfortune when positive externality twists the market.

An assessment forced on creation that produces a negative externality rectifies a portion of the wastefulness related with the externality: not exclusively is the deadweight misfortune not expanded by the expense, but rather the duty balances a portion of the prior wastefulness. Since Weave isn't bearing the full cost of his creation without the expense, he is overproducing nectar. The expense will make him diminish creation, so a portion of the negative externality will be redressed. In figure beneath, when negative creation externalities exists, starting generation happens at Q0 while socially effective generation is Q1. Overproduction creates deadweight loss of DEF. An assessment diminishes supply to SMC (supply that speaks to social negligible expenses) and disposes of the deadweight misfortune triangle that existed before the duty. A similar expense in business sectors with no negative externalities makes deadweight loss of ABC.