Use the Following Information for Any or All of Questions

question 19

Multiple Choice

Use the following information for any or all of Questions .
Suppose the marginal benefits and marginal costs of tire production in the U.S. are modeled as follows, where Q is in millions:
MSB = 12 - 0.4Q MPB = 12 - 0.3Q MSC = MPC = 2 + 0.1Q
-Based on this model, it is apparent that there is a

• A) negative production externality
• B) positive external benefit
• C) consumption externality measured as MEB = - 0.1Q
• D) negatively sloped MEC function