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Part I1. 9. 10. Externality basics Draw a market with a positive consumption externality. Shade and label the area that represents the deadweight loss in
Part I1. 9. 10. Externality basics Draw a market with a positive consumption externality. Shade and label the area that represents the deadweight loss in the market when there is no corrective policy. Also, shade and label the area that represents the total change in damages/benefits from the externality without the corrective policy. Upload an image of your work. (4 points) True or false: It is possible for a Pigouvian tax on a good to hurt (i.e., reduce the surplus of) both consumers and producers of that good, even if the tax is set at the efficient level and the revenue is recycled back to consumers and producers. (2 points, no explanation required, just T/F)
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