1. Your company is considering raising the price of your product due to an increase in costs. For your sales revenues to rise, would the demand curve your company faces need to be price elastic or price inelastic? Explain briefly and draw a graph.

2. a. Name a "negative externality". Explain briefly.

b. On a graph, compare the market price for the good where the externality exists, and what the market would look like if the externality were internalized. Describe briefly.