Question: Using a supply and demand diagram, demonstrate how a negative externality leads to market inefficiency. Discuss the market outcome vs. the socially optimal outcome. How

Using a supply and demand diagram, demonstrate how a negative externality

Using a supply and demand diagram, demonstrate how a negative externality leads to market inefficiency. Discuss the market outcome vs. the socially optimal outcome. How might the government help to eliminate this inefficiency? Show how the government could eliminate this inefficiency on your graph and discuss

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