Homework #15

a)Fire extinguishers exhibit what type of externalities? Explain your response

b)Draw a graph depicting the market for fire extinguishers with this type of externality

c)Indicate the market equilibrium level of output and the efficient (optimal) level of output in your graph above

d)If the external benefit is $10 per extinguisher, describe a government policy that can yield the efficient level of output. Show this graphically.