Scenario: the Following Figure Shows the Private Cost and Social

question 222

Multiple Choice

Scenario: The following figure shows the private cost and social cost of producing Good X. Firm A is the producer of Good X. The production plant and Bob's house are located next to a river. However, the plant is upstream, and Bob's house is downstream. Since production pollutes the river, Bob suffers from a negative externality.

-Refer to the scenario above.What is the value of the negative externality imposed on Bob when the firm produces the socially optimal quantity?

• A) (b d) e
• B) (a c) f
• C) d e
• D) c f

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Definitions:

Stretchable

Capable of being stretched; often refers to materials that can be elongated without breaking.

Self-discipline

The ability to control one's feelings, impulses, and desires in order to achieve long-term goals.

Principle of Justice

A fundamental ethical guideline that emphasizes fairness, equality, and impartiality in the distribution of benefits and burdens.

Ethical Principle

Fundamental guidelines or values that inform and direct moral behavior, ensuring actions are consistent with ethical standards.