Explain why environmental damage would be classified as an externality.
What will be an ideal response?
An externality is an incidental consequence of some economic activity. In the case of environmental pollution, the effect is not necessarily intended. Rather, production or consumption results in a residual of some sort that pollutes. Examples are auto emissions, domestic sewage, and sulfur dioxide emissions from burning coal to generate electricity or refine minerals. The unintended “leftover” is the pollution in the form of an externality.
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A recent medical study reports new benefits of cycling. Simultaneously, the price of the parts needed to make bikes falls. If the change in supply is greater than the change in demand, the price will _________ and the quantity will _________
a. Rise, rise b. Rise, fall c. Fall, rise d. Fall, fall
Refer to the table below. If Stuffed Pies is currently producing 11 units of quality, to maximize profit, Stuffed Pies should ________ the units of quality.
Stuffed Pies is a frozen calzone manufacturer. The table above summarizes Stuffed Pies' marginal revenue and marginal cost of quality at various quality amounts.
A) not change
B) decrease
C) increase
D) increase by 50 percent