Grass seed farmers in Oregon burn their fields after harvest to condition the soil and to kill insects that harm grass. Such burning spews pollutants into the air causing health problems for local residents and creating an externality problem as shown below. This problem deals with a potential resolution of this negative externality.
Part 1: Suppose that a new strain of grass seed is developed that is extremely resistant to pests. Assume that using this seed is less expensive than the current means of avoiding field burning. Use the copy tool to illustrate how this affects either the supply or the social cost of producing grass seed and label it appropriately.
Part 2: Then, use the drop line tool to identify the new market equilibrium with the new strain of grass seed and no negative externality from field burning and label thispoint Mkt-Equil-New.