Question: (a)[10 marks] Using a supply and demand diagram, demonstrate how a positive externality leads to market inefficiency. (b)[5 marks] How might the government help to

(a)[10 marks] Using a supply and demand diagram, demonstrate how a positive externality leads to market inefficiency.

(b)[5 marks] How might the government help to eliminate the inefficiency caused by a positive externality?

(c)[10 marks] Why might merit goods be under-consumed if left to the market and so what can be done to correct this problem? Give an example.

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