An Environmental Economic Consulting Firm Is Hired to Measure the Negative

question 64

Multiple Choice

An environmental economic consulting firm is hired to measure the negative externalities associated with the pollution from an industry. The consultants calculate the marginal social cost of production to be $\mathrm { MSC } = 2 \mathrm { Q } + 30$ and the marginal private cost of production to be $M P C = Q$ $+ 30$ . The market demand curve can be expressed as $P = 60 - Q$ . The sum of the consumer surplus plus producer surplus at the market equilibrium (i.e. the equilibrium where production decisions do not take into account the externality) is:

• A) \(\$ 0\).
• B) \(\$ 112.5\)
• C) \(\$ 150\).
• D) \(\$ 225\)

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Definitions:

Board Members

Individuals elected by shareholders to oversee the management and make key decisions for a corporation.

Shareholders

Individuals or institutions that own one or more shares of stock in a public company, thereby having a partial ownership stake in the company.

Common Stock

Equity securities that represent ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Merger Proposal

An offer or plan for two or more companies to consolidate into one entity, often aiming to achieve market expansion, diversification, or efficiencies.