A farmer notices that a neighboring rancher's cattle are wandering and destroying some of his crops. The farmer decides to offer a payment to the rancher if the rancher will reduce the size of his herd. By doing so, the farmer
A) can be sure that the size of the herd will be reduced and the size of his own harvest will be increased.
B) indicates to the rancher that there is an opportunity cost to the wandering of the cattle, and thereby internalizes the externality.
C) inadvertently bears the costs of the externality when the rancher should be liable for the costs.
D) informs the rancher that the cattle have destroyed crops, which should induce the farmer to build a fence in order to maintain good relations.
B
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When a currency depreciates, its value has
A) been fixed against the value of another country. B) fallen against another currency. C) remained constant against that of another currency. D) risen against another currency. E) fluctuated around a particular value.
If the required reserve ratio increases and the monetary base is unchanged, the value of the money multiplier will ________ and the value of the money supply will ________
A) decline; decline B) decline; increase C) increase; decline D) increase; increase
If four electronics companies agree to decrease their production of cell phones and raise the price of their cell phones to $400, this is an example of ________.
A) price fixing B) monopolization C) bid rigging D) market division
The relationship between the number of hours a student studies for an exam and the exam grade is most likely graphed as
A) a line sloping down from upper right to lower left. B) a line sloping down from upper left to lower right. C) a line sloping up from lower left to upper right. D) a line sloping up from lower right to upper left.