A chemical firm is producing a good that causes a negative externality. 13. Using a demand and supply graph, show market equilibrium using the labels, Pe and Qe. Label S as MPC. Amend the graph to show the level of optimum output Qo. Label the new S curve as MSC. Q 14. What are the ways that the firm can be forced to correct the pollution? - A fire alarm company sells its product in the market. The product results in positive externalities. 15. Using a demand and supply graph, show the market equilibrium using the labels, Pe and Qe. Label D as MPB. Amend the graph to show the level of optimum output Qo. Label the new D curve as MSB