• Compare and contrast positive and negative externalities.
• Give an example of each and explain how each example illustrates the externality.
• Compare and contrast marginal social benefit and marginal social cost and how socially optimum quantity factors into the comparison. Add examples of each term and explain how the example illustrate the term.

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• Explain how externalities and MSB, MSC and socially optimum quantity are connected.
• Develop a scenario that illustrates MSB and MSC and socially optimum quantity.
• Describe your scenario and draw a graph that illustrates your scenario. Make sure to label the MSB and MSC. Beneath your graph explain the process you used to draw the graph. Write it out step by step.