Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the streets when requested. Qs₁ is the quantity supplied without social costs. Qs₂ is the quantity supplied with social costs. What is the negative externality in this situation? Identify the equilibrium price and quantity when we account only for private costs, and then when we account for social costs. How does accounting for the externality affect the equilibrium price and quantity?

Table 12.12

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P $20 $18 $15 $12 $10 $5 0 1 2.5 4 Qd 5 7.5 10 9 7.5 6 Qs1 5 2.5 8 7 5.5 4 QS2 3 0.5