-The Above Figure Shows the Marginal Social Benefit and Marginal

question 192

Multiple Choice

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. For a consumer, the price they are willing to pay for each additional pound of coffee is

• A) always less than the economy's marginal social cost of producing that additional pound.
• B) equal to their own marginal benefit from consuming that additional pound.
• C) equal to their consumer surplus.
• D) Both answers B and C are correct.

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Definitions:

Bystanders

Individuals who are present at an event or incident but do not take part in it, often discussed in the context of emergency situations or accidents.

Congestion Toll

A fee charged to drivers who use certain roads during peak periods, intended to reduce traffic congestion by discouraging the use of those routes.

Internalizing

The process of absorbing or taking in information, values, or costs, often used when discussing the incorporation of external costs into market prices.

Externality

An economic effect of a transaction that affects third parties who did not choose to be involved in the transaction.