Consider two goods--one that generates external costs and another that generates external benefits. The actual market outcome would
a. result in output that is lower than the efficient output for both goods.
b. result in output that is higher than the efficient output for both goods.
c. result in output that is lower than the efficient output for the good with an external benefit and output that is higher than the efficient output for the good with an external cost.
d. result in output that is higher than the efficient output for the good with an external benefit and output that is lower than the efficient output for the good with an external cost.
C
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Beth can earn $7,500 by renting out her house. However, her neighbor keeps a pet dog that chases away whoever comes looking for the house. Because her neighbor has a right to keep his pet untied, Beth is unable to find a tenant
What is the efficient outcome in this case if her neighbor values keeping his pet free for $1,500?
A nonexcludable public good is characterized by nonrivalry in
A. production and nonexcludability. B. consumption and rivalry in production. C. consumption and excludability. D. consumption and nonexcludability. E. none of the above
It would be impossible to have an unlevered bank
a. True b. False Indicate whether the statement is true or false
According to the law of increasing costs, as the United States expends more of its resources on reducing air pollution,
A. the quantity of other goods that must be given up for further reductions in air pollution will decrease. B. the quantity of other goods that must be given up for further reductions in air pollution will increase. C. the social cost of additional air pollution will increase. D. there will be no change in the marginal cost of reducing air pollution.