The demand curve for fire extinguishers slopes downward and the supply curve for fire extinguishers slopes upward.
The production of the 100th fire extinguisher entails the following:
• a private cost of $10; an external cost of $0; a private value of $9; an external benefit of $3.
In order to reach the social optimum, should government use tax or subsidy? [A] What is the amount of the tax or subsidy on each fire extinguisher? [B] Don't include $.