Assume Excessively Large Suvs Include Spillover Costs That Are Not Borne By The

Assume excessively large SUVs include spillover costs that are not borne by the initial consumer but rather society as a whole.

i)Use a supply and demand graph to illustrate a negative externality. Identify the current price and output and the socially optimal price and output.

ii) Explain what the government must do to fix this negative externality. Draw a NEW GRAPH.

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