Open Word and answer the following questions. Save the document and print it when you are done.
1. Give an example of a positive externality in consumption.
2. Analyze the welfare effects of a positive externality in consumption. Use Word's Drawing Tools to support your answer with a demand and supply graph.
3. In each case that follows, describe the regulatory strategy to correct the market failure caused by a positive externality in consumption.
a. Command and control
b. Pigou
c. Coase