Nine friends who love the beach decide to pool their financial resources and equally share the cost of a one-week house rental on Nantucket. Suppose that the beach outside of the house becomes more congested when the nine additional people join the other beachgoers. Which of the following statements is not correct?
a. Use of the beach by the nine new beachgoers will yield a negative externality.
b. The town can reduce the congestion externality by raising the fee to access the beach.
c. An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion.
d. Each of the nine friends would have been better off staying at home.
d
You might also like to view...
Knowledge about the price elasticity of demand is especially useful to managers because it allows them to predict how a change in price would affect a firm's total revenues
Indicate whether the statement is true or false
Under purchasing power parity (PPP), if U.S. monetary growth leads to a long run doubling of the U.S. price level, while Germany's price level remains constant, PPP predicts that the
A) long-run DM price of the dollar will be doubled. B) long-run DM price of the dollar will be halved. C) long-run DM price of the dollar will remain the same. D) short-run DM price of the dollar will be halved. E) short-run DM price of the dollar will be doubled.
If the income effect counteracts the substitution effect, we know that the good in question is a(n)
a. complementary good. b. inferior good. c. luxury good. d. normal good.
Advocates of cutting taxes rather than increasing government expenditures in response to a recession argue that the increase in spending by consumers and business may be more effective than that of the government. Explain this argument