In which of the following situations would a negative externality most likely be involved?
A. It is night and Kenneth is sitting in his easy chair reading a novel by John Grisham. The lamp he is reading by has only a 40-watt light bulb. He is having a hard time reading.
B. Alyson lives near an airport. At five o'clock in the morning every day she can hear the airplanes taking off and it awakens her.
C. Lucy went to a fancy restaurant last night and ordered the most expensive meal on the menu. She hated it.
D. Richard is taking an economics class from Professor Franklin. Professor Franklin often says things that confuse Richard.
Answer: B
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As the economy nears the end of a recession, which of the following would we most likely see?
A) further decreases in consumer spending B) falling wages relative to output prices C) increased spending on capital goods by firms D) increasing interest rates
Suppose that a tax is placed on a particular good. If the buyers end up bearing most of the tax burden, this indicates that the
a. demand is more inelastic than the supply. b. supply is more inelastic than the demand. c. government has required that buyers remit the tax payments. d. government has required that buyers remit the tax payments.
The textile industry is composed of a large number of small firms. In recent years, these firms have suffered economic losses, and many sellers have left the industry. Economic theory suggests that these conditions will
a. shift the demand curve outward so that price will rise to the level of production cost. b. cause the remaining firms to collude so that they can produce more efficiently. c. cause the market supply to decline and the price of textiles to rise. d. cause firms in the textile industry to suffer long-run economic losses.
According to the law of supply
A) people buy more of a good when the price increases. B) people buy less of a good when the price decreases. C) producers provide more of a good when the price decreases. D) producers provide less of a good when the price decreases.