You spend $300 every month to keep your lawn and garden maintained. Your neighbor has told you that she derives $50 a month in enjoyment from being able to look at your beautiful yard. Which of the following is true?
A. You should refuse to spend anything on your yard unless your neighbor pays you $50 a month.
B. If you took into consideration the benefits your neighbor derived, the efficient level of lawn maintenance would be less than $300 a month.
C. If you took into consideration the benefits your neighbor derived, the efficient level of lawn maintenance would be greater than $300 a month.
D. You are spending too much on your yard, because your neighbor derives only $50 worth of benefits.
Answer: C
You might also like to view...
The slope of the short-run Phillips curve is consistent with:
a. the long-run trade-off between the unemployment rate and inflation. b. the long-run trade-off between inflation and GDP. c. the short-run trade-off between the money supply and interest rates. d. the short-run trade-off between business productivity and wage contracts. e. the short-run trade-off between the unemployment rate and inflation.
Elasticity of demand is another way to measure slope
a. True b. False Indicate whether the statement is true or false
For economic growth to increase living standards
A. society must acquire more resources. B. the rate of growth must exceed the rate of population increase. C. society must discover ways of using available resources more efficiently. D. the choices available to consumers must increase.
A key aspect of the principal-agent problem is that
A) the principal cannot perfectly monitor the agent's actions. B) the principal can perfectly monitor the agent's actions. C) the output level does not depend on the agent's actions. D) the principal is always risk averse.