The Net Increase to Total Surplus When a Positive Externality

question 49

Multiple Choice

The net increase to total surplus when a positive externality is corrected is due to:

• A)the transfer of surplus from those affected by the externality to the consumer.
• B)the increased number of units bought and sold in the market.
• C)the transfer of surplus from the consumer to those affected by the externality.
• D)None of these are true.

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Definitions:

Plus Margin

The percentage added to the cost of goods to arrive at a selling price that includes a profit margin.

Transaction Price

The amount of consideration that a company expects to receive from a customer in exchange for transferring goods or services.

Connection Fees

Charges levied by service providers for connecting new users to their service network, such as electricity, water, or telecommunications.

Telecommunications Network

An arrangement of computing and telecommunications resources for transmitting data and voice communications across distances.