Assignment:
Please answer the following questions:
1) Explain what is meant by positive externalities.
2) Describe how an under allocation of resources occurs when positive externalities are present and how this can be corrected by government action.
3) Solve the following using this graph: PositiveExternalities.pdfPreview the document
Calculate the potential benefits to society at equilibrium?
4) What are the potential benefits to society after Government increases subsidies by $2.00?
5) Start at equilibrium. What are the potential benefits to society after Government increases taxes by $0.50?
6) How much in terms of quantity must consumers demand more to gain all the benefits to society?
