The Table Below Shows the Payoff (Profit) Matrix of Firm

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms) .Table 12.2

-When the benefits of an activity are received by those who are not directly involved in it, _____.

A) a negative externality exists
B) the government is producing a free good
C) resources are being used in their highest-valued activity
D) the government has to compensate for the loss in social welfare
E) a positive externality exists