Question: Why are negative externalities and positive externalities also called spillover costs and spillover benefits? Show graphically how a tax can correct for a negative externality

Why are negative externalities and positive externalities also called spillover costs and spillover benefits? Show graphically how a tax can correct for a negative externality and how a subsidy to producers can correct for a positive externality.

How does a subsidy to consumers differ from a subsidy to producers in correcting for a positive externality? LO3

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