Use the Following to Answer Question

question 16

Multiple Choice

Use the following to answer question:
-(Table: Coal Mine Pollution) Use Table: Coal Mine Pollution.The table shows the marginal social benefit and cost of various amounts of pollution from a coal mine.Suppose that the marginal cost from the production process itself (to the producer) is 0.At the market-determined quantity of pollution,the marginal social cost of pollution is:

• A)$800.
• B)$400.
• C)$200.
• D)$0.

Explain the importance of transaction costs in the success or failure of private bargaining solutions to externalities.

Identify and calculate socially optimal quantities and prices in markets affected by externalities.

Analyze the effects of positive and negative externalities on private and social costs and benefits.

Evaluate the role of government interventions such as taxes, subsidies, and regulations in correcting market inefficiencies caused by externalities.

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Definitions:

Final Good

A product that is consumed by the end user and does not require any further processing or manufacturing.

Real GDP

Gross Domestic Product adjusted for inflation, representing the value of all goods and services produced by an economy in a given year in constant prices.

Nominal GDP

The gross domestic product measured at current market prices, without adjusting for inflation, representing the value of goods and services produced.

National Income

The total value of all goods and services produced by a country's economy over a specific time period, including income from foreign investments.