You are having a party and one of your guests lights up a cigar without asking. Explain why this creates an externality
What will be an ideal response?
Smoking in an enclosed room forces other guests to inhale smoke which they would not have chosen to inhale if the decision were completely up to them. This external burden can range from headaches, being uncomfortable, and lung cancer. Of course, you could limit the externality by kicking the guest out.
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Competition among sellers generates
A) allocative efficiency. B) productive efficiency. C) equity. D) scarcity.
Under which exchange rate system was a dollar redeemable for gold only if the dollar was presented by a foreign central bank?
A) a fiat system B) the gold standard C) a managed float exchange rate system D) the Bretton Woods System
When the economy is already operating at nearly full capacity, further fiscal or monetary stimulus will likely:
a. soften inflationary pressures in sectors already at capacity, and increasing employment in sectors with excess capacity. b. trigger inflationary pressures in sectors already at capacity, and decreasing employment in sectors with excess capacity. c. soften inflationary pressures in sectors already at capacity, and decreasing employment in sectors with excess capacity. d. trigger inflationary pressures in sectors already at capacity, and increasing employment in sectors with excess capacity.
In economics, a fixed cost is a cost that
A. is present only in the short run. B. does not vary with the level of output. C. goes up as the level of output goes up. D. goes down as the level of output goes up.