Denise is thinking about setting up a butterfly garden in her backyard. She estimates that it will cost her $2,000 to purchase and install special plants and an irrigation system to attract butterflies. The benefit she expects to receive is $1,800. In addition, neighbor Billy will receive a benefit of $150 and neighbor Sammy will receive a benefit of $100. From this, we can conclude that:
A. butterflies are a negative externality for Billy and Sammy.
B. Denise will set up the butterfly garden without any help from her free-rider neighbors.
C. if Sammy refuses to contribute to the butterfly garden, he will be unable to enjoy its benefits if it is built.
D. if Billy and Sammy contribute the amounts at which they value the butterfly garden, Denise will set it up.
Answer: D
Economics
You might also like to view...
A government subsidy paid to a firm i. increases the demand for the good. ii. has no effect on the supply of the good. iii. leads to an increase in the equilibrium quantity
A) i only B) i and ii C) ii only D) iii only E) i and iii
Economics
What is the "doom loop" responsible for the rapid development and severity of the 2009 euro crisis?
What will be an ideal response?
Economics