Consider the market for fire extinguishers.

a.) Why might fire extinguishers exhibit positive externalities?

b.) Draw a graph of the market for fire extinguishers, labelling the demand curve, the social-value curve, the supply curve, and the social-cost curve.

c.) Indicate the market equilibrium level of output and the efficient level of output. Give an intuition explanation for why thee quantities differ.

d.) If the external benefit is $10 per extinguisher, describe a government policy that would yield the efficient outcome.