The Net Effect of the Externality on Welfare Is Equal

question 10

Multiple Choice

The net effect of the externality on welfare is equal to

• A)d + f
• B)i
• C)h
• D)i + d + f + h

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Definitions:

Utility Function

A mathematical representation in economics that explains how individuals rank preferences or choices to maximize satisfaction.

Indifference Curves

Indifference curves represent combinations of goods between which a consumer is indifferent, showing the trade-offs in consumption that yield equal satisfaction.

Horizontal Axis

In a graph or chart, the x-axis, which typically represents the independent variable or the base for measurement comparisons.

Vertical Axis

The y-axis on a graph or chart which is usually used to measure and represent the dependent variable.