Why are externalities associated with common property rather than private property?
What will be an ideal response?
When private property rights exist, individuals can take someone to court and collect damages when the actions of that person damage the individual's property. When the person has to pay damages, the externality is internalized. With common property, no one can exclude anyone else and there is no legal recourse for collecting damages from the person.
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At the point where a firm incurs diminishing marginal returns, total product will begin to decline
Indicate whether the statement is true or false
Linda earned an income of $3,000 per month, which has now increased to $3,500 per month. She saves 10 percent and spends the remainder on food, lodging, and other expenses. So far, she has managed to save $20,000. What is the change in her consumption per month after the increase in income?
What will be an ideal response?
Suppose that only one curve shifts. If you observe that the equilibrium price decreased while the equilibrium quantity increased, then the market experienced a(n):
A. decrease in supply. B. increase in demand. C. increase in supply. D. decrease in demand.
Reading Consumer Reports before buying a used car:
A. helps buyers increase their chances of avoiding a lemon, or low-quality car. B. does not help buyers because magazines only cover new car sales, not used car sales. C. makes warranties on used cars unnecessary. D. is irrational because the cost of the magazine is greater than the benefit of the information.