1. Greater consumption

of alcohol leads to more motor vehicle accidents and, thus, imposes costs on people who do not drink and drive.

a. illustrate the market for alcohol, labeling the demand curve, the marginal social benefit curve, the supply curve, the marginal social-cost curve.

b. On your graph, shade the area corresponding to the deadweight loss of the market equilibrium.

c. What corrective policy could be effective in this situation?