Suppose that in most car collisions between cars of unequal size, the smaller car sustains the most damage and its occupants suffer the most injury. In answering the following question, assume that, on average, smaller cars generate less air pollution than larger cars and that every person in the economy drives at least one car. Relative to driving an average car, driving a larger-than-average car generates:
A. an external cost.
B. neither an external benefit nor an external cost.
C. an external benefit.
D. a prisoner's dilemma.
Answer: A
You might also like to view...
Which of the following is one of the chief reasons for the change in the participation rate of married women in the U.S. workforce?
Keynes argued that when interest rates were low relative to some normal value, people would expect bond prices to ________ so the quantity of money demanded would ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Congestion pricing
A. is a tax. B. keeps nasal passages clear. C. is never efficient. D. all of these answer options are correct.
In the goods-and-services market, households
A. only supply. B. only demand. C. both supply and demand. D. neither supply nor demand.