Negative Externality The Following Questions Refer to the Accompanying Diagram, Which Shows

question 8

Multiple Choice

Negative Externality

The following questions refer to the accompanying diagram, which shows the effects of a negative externality created by an industry's production. The equilibrium quantity in the absence of any attempt to internalize the externality is QE, and the optimal quantity according to a Pigovian analysis is QO.

-Refer to Negative Externality.Suppose there are no transactions costs.Also suppose the externality is internalized when the damaged parties offer producers a bribe of $5 per unit to reduce their production.Coase's analysis indicates that social gain in this situation will equal

• A) area A + B + F.
• B) area A + B + F - E.
• C) area A + B + C + D + F + G + H.
• D) area A + B + C + F + G.

---

Definitions:

Identity

The way an individual perceives themselves, which is influenced by personal, social, and cultural factors.

Conflicting Demands

Situations where an individual is faced with two or more competing requirements or expectations, which can create stress or require resolution through decision-making.

Social Roles

The behaviors, obligations, and privileges attached to a social position, which guide how individuals are expected to act in specific contexts.

Role Strain

A psychological tension experienced when an individual encounters difficulty in fulfilling multiple requirements of the same role.