Your neighbor has just planted some fragrant flowers. The wonderful scent drifts into your room and makes you happy
A) This scent is an internal cost to you.
B) This cannot be an externality since you are enjoying the scent.
C) This is an externality since you get a benefit from your neighbor's flowers.
D) The social cost of this activity is entirely borne by you neighbor.
C
You might also like to view...
Suppose that research shows that by buying stocks issued by companies whose names begin with the letter G investors can earn above-normal returns in even-numbered years. From the perspective of the efficient markets hypothesis,
A) this is further evidence that the hypothesis is correct. B) this would be considered a pricing anomaly. C) investors must have insider information on these companies. D) purchasers of these stocks must have been noise traders.
The theory of rational expectations states that
a. expected inflation will be no different from actual inflation, on average. b. expectations are based on all possible information. c. individuals always act optimally. d. expected inflation will be lower than actual inflation.
The Clear Plastic Company's plant discharges large quantities of toxic chemicals into some groundwater sources. Residents in the surrounding area have higher medical bills because of Clear Plastic's pollution. These additional medical costs represent
A. the company's private costs. B. the neighboring families' external costs. C. a positive externality. D. a negative externality.
If the price level is initially at P1, then the economy will adjust by:
Refer to the graph above
A. Increasing output produced
B. Decreasing the GDP produced
C. Reducing the price level
D. Increasing the total output demanded