Question: Suppose you wish to reduce a negative externality by imposing a tax on the activity that creates that externality. When the amount of the externality

Suppose you wish to reduce a negative externality by imposing a tax on the activity that creates that externality. When the amount of the externality produced per unit of output increases as output increases, the correct tax can be determined by using a demand-supply diagram; show this. Assume that the marginal private cost curve slopes upward.

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