a real-world example of a negative externality.

• Be specific about the difference between the private and social cost associated with the activity that creates the externality.
• Describe how the difference between social and private costs impacts the amount of the good/activity provided in equilibrium.
• Relative to the social optimum, is there too much or too little of the good provided in equilibrium?
• Provide your best guess of the size of the externality (in terms of dollars).
• How can the government "fix" the problem created by the externality (achieve the social optimum in equilibrium)?