The Following Graph Shows Equilibrium in a Market in the Presence

question 113

Multiple Choice

The following graph shows equilibrium in a market in the presence of an externality. The amount by which the total social cost of producing the private equilibrium level of output exceeds the total social benefit is _____.​ ​
Figure 17.1
​

• A)$3,000
• B)$1,000
• C)$5,000
• D)$1,600
• E)$1,400

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Definitions:

Investment Centre

A business unit or division within an organization that is responsible for generating its own revenues and managing its own investments and expenses.

Profit Centre

A business unit or department within an organization that is responsible for generating its own revenue and profit.

Cost-Plus Transfer Price

A pricing method where the selling price of a product is determined by adding a specific markup to the product's cost.

Market-Price Transfer

A pricing method used in transactions between divisions of the same company, based on prevailing market prices.