When a Negative Externality Is Internalized in a Market,total Surplus

question 137

Multiple Choice

When a negative externality is internalized in a market,total surplus:

• A)increases,but producer and consumer surplus both fall.
• B)decreases,because producer and consumer surplus both fall.
• C)increases,because producer surplus increases.
• D)decreases,because consumer surplus falls more than producer surplus increases.

---

Definitions:

Resource Market

The marketplace where resources or inputs (such as labor, raw materials, and capital) are bought and sold for the purpose of producing goods and services.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, typically labor.

Marginal Resource Cost

The added expenditure for making one more unit of a product or service.

Profit-Maximizing

The process or strategy undertaken by a firm to achieve the highest possible profit from its operations, considering factors like pricing, production, and cost management.