Your neighbor in an apartment complex plays his music very loudly late at night, which makes it difficult for you to get to sleep
You offer the neighbor $50, the monetary value you put on your sleep, to never play his music between midnight and 7 AM. By doing so A) you have failed to bring about an efficient solution since you should have complained to the police.
B) you have indicated the cost of the externality. The externality is not internalized even if he accepts your offer.
C) you have indicated the cost of the externality, which internalizes the externality.
D) you have indicated a willingness to make the external cost a social cost.
C
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A country's domestic currency's real exchange rate, q, is defined as
A) E. B) E times P. C) E times P . D) (E times P )/P. E) P/(E times P ).
If the insurance company offers the insurance for $1,500, then the theory of adverse selection predicts that
Suppose that Dirk and Rollergirl are both considering purchasing insurance. Dirk's "expected loss" is equal to $1,600. Rollergirl's expected loss is equal to $1,200. Also, both Dirk and Rollergirl are "risk averse," and so each of them is willing to buy insurance for an amount that's up to $200 in excess of his/her expected loss. A. both of them will agree to purchase the insurance. B. dirk will purchase the insurance, but Rollergirl will decide that it's too expensive. C. neither one of them will agree to purchase the insurance. D. both of them will agree to purchase the insurance, but the insurance company will still lose money regardless.