Products with positive externalities are under-consumed, thus creating a market failure. How can the government correct this failure? I. By taxing the output of the product to increase tax revenue. II. By paying subsidies to the producers to lower the cost of the product to potential buyers. III. By reducing the marginal social benefit of the product, thus eliminating the externality. IV. By requiring producers to manufacture more of the product. V. By producing it themselves and distributing it free or at very low cost to consumers.

Emery pharmaceutical uses an unstable chemical compound that must be kept in an environment where both temperature and humidity can be controlled. emery uses 825 pounds per month of the chemical, estimates the holding cost to be 50% of the purchase price (because of spoilage), and estimates order costs to be $48 per order. the cost schedules of two suppliers are as follows: vendor 1 vendor 2 quantity price/lb quantity price/lb 1-499 $17 1-399 $17.10 500-999 $16.75 400-799 $16.85 1000+ $16.50 800-1199 $16.60 1200+ $16.25 (a) what is the economic order quantity for each supplier? (b) what quantity should be ordered and which supplier should be used? (c) the total cost for the most economic order sire is $