A Negative Externality Problem

question 36

Multiple Choice

A Negative Externality Problem

Demand for a good is given by Q = 100 - P. The private marginal cost of production is MCP = 10 + Q. There is a $10 per unit negative production externality in this situation.


-Refer to A Negative Externality Problem.Suppose there is no attempt to internalize the externality.Pigovian analysis indicates that the externality creates a deadweight loss equal to

• A) $0
• B) $25
• C) $50
• D) $100

---

Definitions:

IQ Scores

Standardized scores derived from intelligence tests that measure a person's cognitive abilities in relation to their age group.

Peter Principle

A principle suggesting that individuals in a hierarchy tend to be promoted until they reach a level of respective incompetence.

Opposite-Sex Twins

Twins of a multiple birth consisting of one male and one female sibling.

Fraternal Twins

Twins that develop from two different eggs fertilized by two different sperm cells, making them genetically unique, unlike identical twins.