Denise is thinking about setting up a butterfly garden in her backyard. She estimates that it will cost her $2,000 to purchase and install special plants and an irrigation system to attract butterflies. The benefit she expects to receive is $1,800. In addition, neighbor Billy will receive a benefit of $150 and neighbor Sammy will receive a benefit of $100. From this, we can conclude that:
A. butterflies are a negative externality for Billy and Sammy.
B. Denise will set up the butterfly garden without any help from her free-rider neighbors.
C. if Sammy refuses to contribute to the butterfly garden, he will be unable to enjoy its benefits if it is built.
D. if Billy and Sammy contribute the amounts at which they value the butterfly garden, Denise will set it up.
Answer: D
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When a construction firm chooses not to hire Jane as a carpenter simply because she is female, it is called: a. wage discrimination
b. job-entry discrimination. c. affirmative action. d. environmental factor discrimination.
If both borrowers and lenders become discouraged by difficult-to-predict inflation:
A. it will become more difficult for financial intermediation to generate and coordinate savings with investment. B. the excess supply of loanable funds will drive real interest rates higher and higher. C. the velocity of money will increase, leading to higher unemployment and lower real GDP. D. the federal reserve will have to respond by sharply increasing the money supply.
Which of the following statements is not true?
A. Some public goods are paid for by private philanthropy. B. Private provision of public goods is usually unprofitable. C. The free-rider problem results from the characteristics of nonrivalry and nonexcludability. D. Public goods are only provided by government.
Increases in product prices shift the consumer's:
A. budget line to the right. B. budget line to the left. C. indifference curves to the left. D. indifference curves to the right.