The market for Stardust is perfectly competitive. However, its marginal social costs exceed its marginal private costs.

(a) Graph the market for Stardust, labeling the marginal private benefit (MPB), marginal social benefit (MSB), marginal private cost (MPC), and marginal social cost (MSC).

(b) What type of market failure does Stardust suffer from? Explain.

(c)Shade the deadweight loss, if any.

(d) The intersection of the MSC and the MSB occurs at a price of $40 and a quantity of 200 units. The MPC curve intersects 200 units at $10. The market without government intervention clears at $20 and 500 units. The MSC intersects 500 units at $60. Calculate the deadweight loss of this market failure.

(e) What is the per-unit cost of the externality?

(f) Without intervention, would the firm's total revenue at the socially optimal quantity be higher or lower than its total revenue at market equilibrium? Explain.

(g) What type of government intervention could achieve allocative efficiency in this market? Explain.