Negative Externality The Following Questions Refer to the Accompanying Diagram, Which Shows

Multiple Choice

Negative Externality

The following questions refer to the accompanying diagram, which shows the effects of a negative externality created by an industry's production. The equilibrium quantity in the absence of any attempt to internalize the externality is QE, and the optimal quantity according to a Pigovian analysis is QO.

-Refer to Negative Externality.Suppose there are no transactions costs.Also suppose the externality is internalized when the damaged parties offer producers a bribe of $5 per unit to reduce their production.Coase's analysis indicates that social gain in this situation will equal

A) area A + B + F.
B) area A + B + F - E.
C) area A + B + C + D + F + G + H.
D) area A + B + C + F + G.