Assume excessively large SUVs include spillover costs that are not borne by the initial consumer but rather society as a whole. i)Use a supply and demand graph to illustrate a negative externality. Identify the current price and output and the socially optimal price and output. ii) Explain what the government must do to fix this negative externality. Draw a NEW GRAPH.

Assume excessively large SUVs include spillover costs that are not borne by the initial consumer but rather society as a whole. i)Use a supply and demand graph to illustrate a negative externality. Identify the current price and output and the socially optimal price and output. ii) Explain what the government must do to fix this negative externality. Draw a NEW GRAPH.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 10PAE

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