Explain whether the following are examples of externalities
a. Alisha did not sleep well because her neighbor was playing loud music.
b. Rochelle was late for a job interview because her alarm did not go off.
c. José, who is allergic to pollen, is sick from the flowers that grow in his garden.
a. This is an example of a negative externality. Loud music played by her neighbor has a spillover effect on Alisha as she is unable to sleep.
b. This is not an example of an externality. Rochelle was late because her alarm did not go off. There is no spillover cost here that is affecting someone who is not involved in the activity.
c. This is not an example of an externality. Since José is sick from the flowers that grow in his own garden, he is directly engaged in the activity. Note that if his neighbor got sick, then it would qualify as an externality.
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One reason why a consumer might buy from a high-priced local hardware store instead of going to a big discount store several miles away in another community is that
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a. $0.13. b. $1.25. c. $8. d. $200. e. $8,000.