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 The markets below show conditions in a perfectly competitive market in which there is some sort of externality Market A Market B S=MSC MSC MSB DEMSB D Quantity Quantity Market C Market D S=MSC MSC $ X MSB DEMSB Quantity Quantity 17

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 The markets below show conditions in a perfectly competitive market in which there is some sort of externality Market A Market B S=MSC MSC MSB DEMSB D Quantity Quantity Market C Market D S=MSC MSC $ X MSB DEMSB Quantity Quantity 17. A corrective subsidy to producers would lead to an efficient level of output in Market A. 18. A corrective subsidy to producers would lead to an efficient level of output in Market B. 19. A corrective tax on producers would lead to an efficient level of output in Market C. 20. A corrective tax on producers would lead to an efficient level of output in Market D. Use the following information to answer the next TWO questions: Consider the market for cigarettes where there exists a negative externality and a corrective tax. 21. There are no external costs in the market with the corrective tax. 22. There is no deadweight loss in the market with the corrective tax.