1. Beef cattle produce methane, a greenhouse gas that contributes to global warming. a. Identify the market that has failed: __ b. What type of market failure is this? __ c. Diagram: d. Explain: e. Possible government solutions:

a. The market that has failed is the beef cattle market.<br /><br />b. This type of market failure is an externality, specifically a negative externality.<br /><br />c. Diagram: (Since I cannot draw diagrams, I'll describe it)<br />- Draw a standard supply and demand graph.<br />- Label the vertical axis as "Price" and the horizontal axis as "Quantity."<br />- The demand curve (D) slopes downward.<br />- The private supply curve (S) slopes upward.<br />- Draw a second supply curve to the left of the private supply curve, labeled "Social Supply" (S_social), which includes the external costs of methane emissions.<br />- The intersection of the demand curve (D) and the social supply curve (S_social) represents the socially optimal quantity and price.<br /><br />d. Explanation:<br />The production of beef cattle generates methane, a greenhouse gas that contributes to global warming. This creates a negative externality because the social cost of methane emissions is not reflected in the market price of beef. As a result, the market equilibrium quantity of beef is higher than the socially optimal quantity, leading to overproduction and excessive pollution.<br /><br />e. Possible government solutions:<br />- Implementing a tax on beef production equivalent to the external cost of methane emissions (Pigovian tax).<br />- Providing subsidies for research and development of more sustainable farming practices.<br />- Imposing regulations or caps on methane emissions from cattle farms.<br />- Encouraging consumers to reduce beef consumption through public awareness campaigns.