3 Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive.

a Illustrate the market for alcohol, labelling the demand curve, the social-value curve, the supply curve, the social-cost curve, the market equilibrium level of output and the efficient level of output.

b On your graph, shade the area corresponding to the deadweight loss of the market equilibrium. (Hint: The deadweight loss occurs because some units of alcohol are consumed for which the social cost exceeds the social value.) Explain.