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Need questions 2 and 3!! 2. Negative Externalities The drainage of chemical fertilizers used on agricultural plots along the banks of the Blue River has

Need questions 2 and 3!!

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2. Negative Externalities The drainage of chemical fertilizers used on agricultural plots along the banks of the Blue River has led to the formation of a dead zone in the river that cannot support aquatic life. Does the market for fertilizers produce the optimal quantity without any government intervention? Why or why not? Explain your answer with a diagram of Supply, Demand, and the Marginal Social Cost of the chemical fertilizer. Point out if there is a difference between the market equilibrium price and quantity versus the socially optimal price and quantity. (5 points) 3, Positive Externalities Cleanliness experts say that hygienic cleaning of a house helps in preventing the spread of germs in the area. What is the inefficiency created by not recognizing this positive externality? Explain with a suitable diagram showing the difference between the marginal private benefit (given by the households' demand curve for hygienic cleaning) and the marginal social benefit (including the benefit to members of the community outside the household who avoid getting sick if the household cleans more). Point out the difference between the market equilibrium price and quantity verus the socially optimal price and quantity. (5 points)

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