1. P D O Q Q (a) Kinked demand curve for an oligopolistic firm
(b) Price stability due to kinked demand curve P
MC2 a
MC1 P1 P1 a D
D = AR b O Q Q Q1 Q1 MR

2. Quantity of chemical produced α quantity of pollutant
Price of chemical
MSC MC P2 P1
Negative production externality
1)Animate P1 & Q1\\\\\\\\\\\\2)Animate MSC 3) & P2 Q2 \\\\\\\4)externality
D = AR MR O Q2 Q1
Quantity of chemical produced α quantity of pollutant

3. Quantity of chemical produced α quantity of pollutant
Perfect competition
MSC
Price of chemical
MPC
Social cost B A P2
D = AR C P1
1)Animate animate Q2 P2 with lines.2) triangle ABC 3) social cost D O Q2 Q1
Quantity of chemical produced α quantity of pollutant

4. Quantity of chemical produced α quantity of pollutant
Price of chemical
MSC
MPC P2 P1
Tax = MSC – MPC B C
D = AR MR O Q2 Q1
Quantity of chemical produced α quantity of pollutant

5. Merit good P O O MPC P3 P2 P1 MSB P0 DD = MPB Q1 Q2 F L K S
Quantity of education