Firm XYZ produces paper products, which sells for $100,000. However, the production of the paper results in air pollution. The cost of this negative externality is $6,000. What is the marginal private benefit (MPB) if this externality is ignored?
A) $106,000
B) $6,000
C) $94,000
D) $100,000

Question

Quizplus · Accepted Answer

The marginal private benefit (MPB) is the benefit that the firm receives from producing and selling the paper products, which is $100,000. This figure does not account for the external costs of pollution.

Firm XYZ Produces Paper Products, Which Sells for $100,000