Externalities are created when parties not involved in an economic transaction are affected by it

Sharmila has a budget line for DVDs and books. DVDs are on the vertical axis and books on the horizontal. Her budget line becomes steeper as

A) the price of a DVD falls. B) the price of a DVD rises. C) her income decreases. D) her income increases.

Congressman Murphy made the following proposal: "We should establish policies that completely eliminate air pollution. This is the only way to ensure that none of our citizens suffer the negative effects of air pollution"

If Congressman Murphy's proposal was adopted and all forms of air pollution were eliminated, which of the following would be true? A) The total cost of pollution reductions would equal the total benefit to society. B) The marginal cost from pollution reductions would exceed the marginal benefit. C) The total benefit to society from reductions in air pollution would be maximized. D) Economic efficiency would be maximized