Give an example of a market/industry where a negative externality in present.

a. What is the difference between the private, unregulated, market output (Q)/price (P) and the optimal, regulated, market output (Q)/price (P). Explain why/how this difference comes about. Use and explain private cost, social cost, and external cost.

b. Explain the source of dead weight loss in such a market. Interpret this dead weight loss.

c. Provide two policy solutions to this problem. Use a command-and-control option and a market-based option.