What is a negative externality construct a graph

Assignment Help Business Economics

Reference no: EM133327979

Topic: ECON 2302 Project

Question 1: What is a negative externality? Construct a graph for the market for Steel showing the market price and quantity when the firms are dumping their industrial waste in the local waterways. What is the motivation for firms to pollute the local waterways?

Question 2: Explain how third parties are adversely affected from the pollution and how the negative externality can be internalized. Draw into the graph the appropriate shift of the supply curve which will remedy the negative externality and bring about the socially optimal level of output.

Reference no: EM133327979

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