Which of the following offers the best example of a positive externality?
a. A coastal dairy farmer's undeveloped land offers unimpeded views of the ocean for a nearby neighborhood.
b. A pulp mill emits chlorine pollution into the water, harming members of society.
c. A welding shop makes a lot of noise, reducing the property values of nearby homes.
d. A person goes to a store and pay $0.75 for a candy bar that he can eat.
a
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The process in which a cycle of falling asset prices and falling prices of goods and services can increase the severity of an economic downturn is called:
A) financial crisis B) bank run C) sovereign debt crisis D) debt-deflation process
Which of the following is most likely to benefit from government established price floors in agriculture?
A) large farm owners and corporate farms B) small farmers C) cattle ranchers D) low income farmers
The authors of this text argue that oligopolies are interdependent firms. What do they mean by this? Give three examples of the types of interdependence which might occur.
What will be an ideal response?
The government often intervenes when private markets fail to provide an optimal level of certain goods and services. For example, the government imposes an excise tax on gasoline to account for the negative externality that drivers impose on one another. Why might the private market not reach the socially optimal level of traffic without the help of government?