Question: 16. Based on the following graph: S = MPC = MSC MSB D = MPB Q (a) Is the good a positive or negative

16. Based on the following graph: S = MPC = MSC MSB D = MPB Q (a) Is the good a positive or negative externality? Is it in consumption or production? How do you know? (b) Is there under- or over-provision? Why? (c) Label Consumer Surplus (CSM). (d) Label Producer Surplus (PSM). (e) Label the Externality (Ex). (f) Label Welfare (WM). (g) Label the deadweight loss associated with the externality. (h) What policy can the government enact to reach the socially optimal output (internalize the exter- nality).

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