Refer to the Accompanying Figure to Answer the Questions That

question 17

Multiple Choice

Refer to the accompanying figure to answer the questions that follow.

-This profit-maximizing firm's total profit is equal to:

• A) $160.
• B) -$160.
• C) $320.
• D) -$320.
• E) $100.

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Definitions:

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with environmental, health, and safety concerns of public and private actions.

Positive Externality

A benefit that is enjoyed by a third-party as a result of an economic transaction.

Negative Externalities

Unintended adverse effects of an economic activity on unrelated third parties; they represent a failure of the market to fully account for the impacts of transactions.

Social Planner

A hypothetical figure in economic theories who makes decisions designed to allocate resources efficiently and achieve social welfare objectives.