Question 9 (An Evaluation of Competitive Markets |) a) What is a Market Failure? b) List and discuss 5 issues that can lead to Market Failure. c) Assume that a Market can be described by the following equations: P = 4,000 - Qd (Demand) P = 1,000 + OS (Supply) MSB : 6,000 Qd (Marginal Social Benefit due to Positive Externality) c.1) Calculate the equilibrium price and output in the market. 0.2) What is the Socially optimal amount of output? Hint Equate MSB equation with the Supply equation) 0.3) Make a graph that illustrates c.'| and C2 Question 10 (An Evaluation of Competitive Markets II) a) What is a Positive Externality? Provide an example. b) What is a Negative Externality? Provide an example. c) Assume that a Market can be described by the following equations: P = 5,000 - Qd (Demand) P :1,000 + Qs (Supply) MSC : 4,000 + OS (Marginal Social Cost due to Negative Externality) c.1) Calculate the equilibrium price and output in the market. c.2) What is the Socially optimal amount of output? Hint Equate MSC equation with the Demand equation) 0.3) Make a graph that illustrates c.'| and C2