DoneExam 2 22. According to the concept of present value, the value of $250 toda

Question

DoneExam 2 22. According to the concept of present value, the value of $250 today is: O equal to $250 in six months. O less than $250 to be received in six months o more than $250 to be recelved in six months. O equal to $250 to be received in one year 23. Eliminating a smoking ban in public restaurants creates a: tragedy of the commons positive externality O common property resource market failure. O negative externality 24. If air pollution comes from multiple sources and it causes many people to sufer, then an efficient agreement among the parties is difficult to achieve because: social costs are high. O production costs would be high. o transaction costs are high. pollution costs are high. 25. Product differentiation; contributes to production efficlency adds product information without increasing product cost reduces product price reduces price elasticity of demand Colege 2

Explanation / Answer

22. The concept of present value shows the worth of a future sum of money in today's dollars adjusted for inflation and interest rate. The value of $250 today will be more than the value of $250 that will be received in 6 months, because the sum $250 that is received in six months has less value in today's period(as present value is calculated by adjusting interest rate and inflation rate).

Answer-option C

23. Smoking causes negative externality. Eliminating a smoking ban will cause people to smoke freely in public restaurants and people who come to that restaurants will face external costs created from the smoking. So, the action of eliminating the smoking ban will create a negative externality.

Answer- option D

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