An Environmental Economic Consulting Firm Is Hired to Measure the Negative

question 30

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 $M S C = 2 Q + 30$ and the marginal private cost of production to be $M P C = Q$ $+ 30$ . The market demand curve can be expressed as $P = 60 - Q$ . If the consultants have accurately measured the impact of the pollution externality, the net social benefit of producing at the social optimum (rather than at the private optimum) is:

• A) \(\$ 0\).
• B) \(\$ 112.5\)
• C) \(\$ 150\).
• D) \(\$ 250\)

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Definitions:

Work Motivation

The conditions and processes responsible for the arousal, direction, magnitude, and maintenance of effort of workers on the job.

Performance Enhancement

Techniques or substances used to improve any form of activity performance in humans.

Yerkes-Dodson Law

A psychological principle stating that performance increases with physiological or mental arousal, but only up to a point, after which performance begins to decrease.

Moderate Arousal

A state of being that is neither too low nor too high in terms of physiological and psychological activation, often considered optimal for effective performance on tasks.