please solve them as soon as possible

3) Imagine that firms produce shirts and that producing each shirt generates a\\r\\nnegative externality, which we will call pollution.

\\r\\na. Draw supply and demand curves when firms treat the pollution as an externality\\r\\nand show how they would change if firms were to instead consider the\\r\\nexternality as part of their costs.\\r\\n

b. How does failing to consider the externality affect the equilibrium price and\\r\\nquantity of shirts, relative to the case where firms consider the externality?\\r\\n

4) Now consider firms that produce new scientific discoveries (not shirts!) that generate a\\r\\npositive externality because other firms can build on their findings.\\r\\n

a. Draw supply and demand curves when firms treat future scientific advances as\\r\\nan externality and show how they would change if firms were to instead consider\\r\\nthe externality as part of their benefits.

\\r\\nb. How does failing to consider the externality affect the equilibrium price and\\r\\nquantity of scientific discoveries, relative to the case where firms consider the\\r\\nexternality?

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3 a Externalities are negative side effects Firm usually does not take into accou... View the full answer