Question

Question 3 of 15 - Ch. 10

Assignment Score:

Question 3 of 15

The lease on Allison's apartment will expire next month, and she wants to move closer to campus. There are two apartments that she likes. Both are close to campus and in her price range. The first one is next door to a garage where local bands often practice late at night. The second one is next door to a donut shop that opens at 5 a.m.

If she likes to stay up late and loves listening to all kinds of music, she will view the bands practicing as a(n)

private good.

external cost.

external benefit.

price floor.

willingness to pay.

If she is a morning person and loves the smell of donuts, she will view the donut shop as a(n)

external cost.

private good.

price ceiling.

willingness to pay.

external benefit.

If her roommate hates loud music and the smell of donuts makes her sick, she will reject both apartments due to what she sees as

an external benefit.

asymmetric information.

a private good.

an external cost.

a price floor.

Answer 1

a) If she is an night owl and like music then she will see the bands presence as external benefit in the market. the answer is "C", this is a positive externality in the market.

b) if she is a morning person then she will see the donut shop as external benefits.

c) her roommate will see that as an external cost in the market.