Here is my answer to question 3:

Suggest alternative measures other than banning the use of plastic bags.

Other than the typical ban that government can enforce which may not be very effective, there are alternative measures to deal with the negative externalities plastic bags bring about.

The government has stated on educating the public on plastic bags and encourages them to minimise the use of plastic bags. This is seen in BYOB (Bring Your Own Bag) day which supermarkets such as NTUC Fairprice charges consumers for each plastic bag given out.

Therefore, I suggest that the government to solve the problem by innovating and invest in Research and Development. R&D would help in finding more environmentally friendly plastic bags and it would also help to lower cost of production in such plastic bags in the future.

In this case, the marginal private cost curve will be pushed towards the marginal social cost curve.

Social Cost=Private Cost+ (External Cost in Prod. - External Benefits in Prod.)

As plastic bags create an external cost in production, R&D in more environmentally friendly bags would create an external benefit in production. This would externalities in production and the divergence between the two cost curves closes up.

Lastly, R&D allows the demand for plastic bags to be met without depriving the society from it by banning. It also reduces environment problems created by the previous generations of plastic bags.

Here is a picture of an environmentally friendly plastic bag: