Consider the market for fire extinguishers.a. Why might fire extinguishers exhibit positiveexternalities?b. Draw a graph of the market for fire extinguishers,labeling the demand curve, the social-value curve,the supply curve, and the social-cost curve.c. Indicate the market equilibrium level of outputand the efficient level of output. Give an intuitiveexplanation for why these quantities differ.d. If the external benefit is $10 per extinguisher,describe a government policy that would yield theefficient outcome.

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