The government can help when externalities exist.

Concept #1: Public Solutions to Externalities: Command-and-Control Policies and Corrective Pigovian Taxes and Subsidies

Concept #2: Public Solutions to Externalities: Quantity Limits

Practice: Based on the figure above, an unregulated market would produce:

Practice: The figure above contains: 

Practice: A per-unit _______________________ would result in the production of the socially optimal quantity.