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Fire extinguishers exhibit positive externalities because, even though people buy them for their own use, they may prevent fire from damaging the property of others.

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Fire extinguishers exhibit positive externalities because, even though people buy them for their own use, they may prevent fire from damaging the property of others. The following graph shows the market for fire extinguishers. Determine whether the private and social values are equal in this case. If they are not, shift the demand curve in the appropriate direction to reflect this difference. Then determine whether the private and social costs are equal in this case. Again, if they are not, shift the supply curve to reflect the difference. (? O supply Demand Supply + Price of Fire Extinguishers Market Demand Optimum Quantity of Fire Extinguishers Use the black point (plus symbol) to indicate the market equilibrium level of output. Then use the grey point to indicate the efficient level of output in this case. Suppose the external benefit is $10 per extinguisher. True or False: The government could achieve the efficient outcome by giving out fire extinguishers for free using tax revenue. True O False

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