The classic example of a detrimental externality is

In the above figure, when the quantity equals 400 pretzels

A) consumers are willing to pay $2 for the 400th pretzel. B) producers are willing to supply 400 pretzels for $3. C) producers are willing to supply 400 pretzels for $2. D) the marginal benefit is greater than the marginal cost.

During a recession, rising transfer payments and falling tax collections

I. help cushion households from the impact of the recession. II. buffers the fall in real GDP (relative to a situation where transfer payments do not rise and tax revenues do not fall). III. tend to increase a budget deficit or reduce a budget surplus. A) I only B) I and II only C) II and III only D) I, II, and III