With the help of a diagram, illustrate the deadweight loss associated with a negative externality. How does a Pigouvian tax works to solve the welfare loss from such a deadweight loss

Negative Externalities and Deadweight Loss:

In microeconomics, externalities occur when the actions of one economic agent affect another party who did not choose to incur that effect. Negative externalities, in particular, refer to situations where the external impact is detrimental. An example of a negative externality is pollution generated by a factory that affects the health of nearby residents.

A useful tool to illustrate the concept of deadweight loss associated with negative externalities is a standard supply and demand diagram. Let's consider a market for a good or service where the production or consumption generates a negative externality.

1. Graphical Representation:

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