4. For the following examples, determine whether there is an externality (or mor

Question

4. For the following examples, determine whether there is an externality (or more than one). If so, describe it, including references to whether it is positive or negative and whether it is a consumption or production externality . The fanciest club in town opening right downstairs from your apart- ment. . Research and development by a high tech firm. . Your neighbor owning a gun. . Buying a car with added safety features that lowers the likelihood of Your two best friends making out at the dinner table. British Petroleum drills for oil in the gulf coast the drivers/passengers death in the event of an accident Bringing crying babies on a plane

Explanation / Answer

As per Chegg guidelines, we are required to answer only first four parts of the question, But I will try to answer all the parts. Thanks.

Ans:

1. "The Fanciest Club...." - It is a negative externality. We want to prefer silence around our apartment but the club will produce noise. So, we have to consume noise. It is a consumption externality.

2. :Research and...." - It is a positive externality as a R&D by firm will imrove the level of product distributed by a firm. It is a production externaltiy as R&D by one firm will help other firms also.

3. :Your two best..."- It is a negative externaltiy. Because of them, it would be difficult for us to have food. So, consumption externality or negative consumption externality.

4. "Neigbor owning a gun" - If he keep practice shooting in backyard then it will increase the noise level around my house, and I will prefer silence around my house. It will be negative consumption externality.

5. :"British Petroleum..."- Negative consumption externaltiy because we would like to consume gold course for playing.

6. "Buying.."- Positive consumption externality.

7. "Brining..."- Negative consumption externality.

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.