Deck 16: Externalities, Public Goods, and Social Choice

Question 1

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. Absent government intervention, how much fertilizer will be produced?

A) Zero because any level of production involves an external cost.
B) 50 bags
C) 60 bags
D) indeterminate from this information

Answer 1

C

Question 2

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. To force this firm to produce the efficient level of output, the government should impose a tax of

A) $5.00 per car.
B) $10.00 per car.
C) $15.00 per car.
D) an amount that is indeterminate from this information.

Answer 2

B

Question 3

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. What is the total damage imposed as a result of producing the market (unregulated) level of fertilizer?

A) $250
B) $300
C) $500
D) $600

Answer 3

B

Question 4

Assuming no externalities exist, if a good's price is less than its marginal cost, then the benefits consumers derive are

A) greater than the cost of resources needed to produce it and less should be produced.
B) greater than the cost of resources needed to produce it and more should be produced.
C) less than the cost of resources needed to produce it and less should be produced.
D) less than the cost of resources needed to produce it and more should be produced.

Question 5

An externality is

A) a cost or benefit resulting from some activity or transaction that is imposed or bestowed on parties outside the activity or transaction.
B) the total cost to society of producing an additional unit of a good or service.
C) the amount a consumer pays to consume an additional amount of a particular good.
D) a problem intrinsic to public goods: The good or service is so costly that its provision generally does not depend on whether or not any single person pays.

Question 6

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. The marginal damage cost imposed as a result of producing automobiles is

A) $5.00 per car.
B) $10.00 per car.
C) $15.00 per car.
D) indeterminate from this information.

Question 7

Vaccinations convey ________ to third parties.

A) positive externalities
B) negative externalities
C) economies of scale
D) public goods

Question 8

Second hand cigarette smoke is an example of a(n) ________.

A) economy of scale
B) externality
C) public good
D) government failure

Question 9

The field of environmental economics is concerned with ________.

A) externalities
B) public goods
C) government inefficiency
D) economies of scale

Question 10

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. The marginal damage cost imposed as a result of producing fertilizer is

A) $5.00 per bag of fertilizer.
B) $10.00 per bag of fertilizer.
C) $15.00 per bag of fertilizer.
D) indeterminate from this information.

Question 11

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. What is the total damage imposed as a result of producing the efficient level of fertilizer?

A) $0
B) $250
C) $300
D) $500

Question 12

Assuming there are no externalities, if a firm is producing at an output level where the benefits to consumers are less than the cost to the suppliers to produce it, then price

A) equals marginal cost.
B) is greater than marginal cost.
C) is less than marginal cost.
D) is less than marginal revenue.

Question 13

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. The efficient amount of cars is

A) 25.
B) 35.
C) zero because any production results in an external cost.
D) indeterminate from the information given.

Question 14

Air pollution generated by a steel mill is an example of

A) a positive production externality.
B) a negative production externality.
C) a public good.
D) the free-rider problem.

Question 15

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. To force this firm to produce the efficient level of output, the government should impose a tax of

A) $5.00 per bag of fertilizer.
B) $10.00 per bag of fertilizer.
C) $15.00 per bag of fertilizer.
D) an amount that is indeterminate from this information.

Question 16

A well-maintained house and yard is an example of

A) a positive externality.
B) a negative externality.
C) a public good.
D) logrolling.

Question 17

The many types of pollution do NOT include ________ pollution.

A) air
B) price
C) water
D) sound

Question 18

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. The unregulated (market) amount of cars is

A) 25.
B) 35.
C) zero because any production results in an external cost.
D) indeterminate from the information given.

Question 19

Refer to the information provided in Figure 16.1 below to answer the questions that follow. Figure 16.1
Refer to Figure 16.1. The efficient amount of fertilizer is

A) zero because any level of production involves an external cost.
B) 50 bags.
C) 60 bags.
D) indeterminate from this information.

Question 20

Assuming there are no externalities, if a firm is producing at an output level where the benefits to consumers exceed the cost to the suppliers to produce it, then price

A) equals marginal cost.
B) is greater than marginal cost.
C) is less than marginal cost.
D) is less than marginal revenue.

Question 21

If there are external costs of production and perfectly competitive firms do not account for these costs, at the equilibrium level of output

A) P = MC = MSC.
B) P = MC and P < MSC.
C) P = MC and P > MSC.
D) P > MC and P = MSC.

Question 22

If there are external costs of production not accounted for, then marginal

A) cost equals marginal social cost.
B) cost is less than marginal social cost.
C) cost is greater than marginal social cost.
D) social cost is zero.

Question 23

Refer to the data provided in Table 16.2 below to answer the following questions.
Table 16.2
$$\begin{array} { c c c } \text { Tons of Glass } & \text { MC } & \text { MSC } \\\hline 1 & 20 & 40 \\2 & 30 & 50 \\3 & 40 & 60 \\4 & 50 & 70 \\5 & 60 & 80 \\\hline\end{array}$$

-Refer to Table 16.2. This glass-recycling firm is perfectly competitive and is forced to take damage costs into account. If the market price of the product is $50, the firm will produce

A) 0 tons of glass.
B) 2 tons of glass.
C) 3 tons of glass.
D) 4 tons of glass.

Question 24

Refer to the data provided in Table 16.2 below to answer the following questions.
Table 16.2
$$\begin{array} { c c c } \text { Tons of Glass } & \text { MC } & \text { MSC } \\\hline 1 & 20 & 40 \\2 & 30 & 50 \\3 & 40 & 60 \\4 & 50 & 70 \\5 & 60 & 80 \\\hline\end{array}$$

-Refer to Table 16.2. This glass-recycling firm is perfectly competitive and is forced to take damage costs into account. If the market price of the product is $50 a ton and the firm behaves as a profit-maximizer, then total damage will be

A) $0.
B) $40.
C) $50.
D) $90.

Question 25

Refer to the data provided in Table 16.1 below to answer the following questions.
Table 16.1 $$\begin{array} { c l l } \text { Tons of Salt } & \text { MC } & \text { MSC } \\\hline 1 & 10 & 20 \\2 & 20 & 30 \\3 & 30 & 40 \\4 & 40 & 50 \\5 & 50 & 60\end{array}$$

-Refer to Table 16.1. This salt processing firm is perfectly competitive and is forced to take damage costs into account. If the market price of the product is $30 a ton and the firm behaves as a profit-maximizer, how much total damage will result?

A) $0
B) $20
C) $30
D) $50

Question 26

Refer to the data provided in Table 16.1 below to answer the following questions.
Table 16.1 $$\begin{array} { c l l } \text { Tons of Salt } & \text { MC } & \text { MSC } \\\hline 1 & 10 & 20 \\2 & 20 & 30 \\3 & 30 & 40 \\4 & 40 & 50 \\5 & 50 & 60\end{array}$$

-Refer to Table 16.1. This salt processing firm is perfectly competitive and is not forced to take damage costs into account. If the market price of salt is $30 a ton, the firm will produce

A) 0 tons of salt.
B) 2 tons of salt.
C) 3 tons of salt.
D) 4 tons of salt.

Question 27

Refer to the data provided in Table 16.2 below to answer the following questions.
Table 16.2
$$\begin{array} { c c c } \text { Tons of Glass } & \text { MC } & \text { MSC } \\\hline 1 & 20 & 40 \\2 & 30 & 50 \\3 & 40 & 60 \\4 & 50 & 70 \\5 & 60 & 80 \\\hline\end{array}$$

-Refer to Table 16.2. This glass-recycling firm is perfectly competitive and is NOT forced to take damage costs into account. If the market price of glass is $50 a ton and the firm behaves as a profit-maximizer, then total damage will be

A) $40.
B) $80.
C) $220.
D) $1,000.

Question 28

If there are external costs in production and firms do not have to account for these costs, then firms will produce

A) at the efficient level.
B) an output level that is below the efficient level.
C) an output level that is above the efficient level.
D) an output level that is either above or below the efficient level.

Question 29

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. What is the total damage imposed as a result of producing the market (unregulated) level of fertilizer?

A) $250
B) $350
C) $500
D) $700

Question 30

Refer to the data provided in Table 16.1 below to answer the following questions.
Table 16.1 $$\begin{array} { c l l } \text { Tons of Salt } & \text { MC } & \text { MSC } \\\hline 1 & 10 & 20 \\2 & 20 & 30 \\3 & 30 & 40 \\4 & 40 & 50 \\5 & 50 & 60\end{array}$$

-Refer to Table 16.1. The marginal damage costs imposed on society from processing four tons of salt are

A) $2.50 per ton of salt.
B) $10 per ton of salt.
C) $12.50 per ton of salt.
D) indeterminate from this output.

Question 31

If a profit-maximizing perfectly competitive firm does not have to compensate society for a negative externality, the firm will choose to produce where

A) price equals marginal cost.
B) price equals marginal social cost.
C) marginal cost equals marginal social cost.
D) marginal revenue equals marginal social cost.

Question 32

Refer to the information provided in Figure 16.2 below to answer the questions that follow. Figure 16.2
Refer to Figure 16.2. What is the total damage imposed as a result of producing the efficient level of fertilizer?

A) $0
B) $250
C) $350
D) $500

Question 33

Refer to the data provided in Table 16.2 below to answer the following questions.
Table 16.2
$$\begin{array} { c c c } \text { Tons of Glass } & \text { MC } & \text { MSC } \\\hline 1 & 20 & 40 \\2 & 30 & 50 \\3 & 40 & 60 \\4 & 50 & 70 \\5 & 60 & 80 \\\hline\end{array}$$

-Refer to Table 16.2. This glass-recycling firm is perfectly competitive and is not forced to take damage costs into account. If the market price of glass is $50 a ton, the firm will produce

A) 0 tons of glass.
B) 2 tons of glass.
C) 3 tons of glass.
D) 4 tons of glass.

Question 34

Refer to the data provided in Table 16.1 below to answer the following questions.
Table 16.1 $$\begin{array} { c l l } \text { Tons of Salt } & \text { MC } & \text { MSC } \\\hline 1 & 10 & 20 \\2 & 20 & 30 \\3 & 30 & 40 \\4 & 40 & 50 \\5 & 50 & 60\end{array}$$

-Refer to Table 16.1. This salt processing firm is perfectly competitive and is not forced to take damage costs into account. If the market price of salt is $30 a ton and the firm behaves as a profit-maximizer, how much total damage will result?

A) $10
B) $30
C) $40
D) $90

Question 35

Refer to the data provided in Table 16.1 below to answer the following questions.
Table 16.1 $$\begin{array} { c l l } \text { Tons of Salt } & \text { MC } & \text { MSC } \\\hline 1 & 10 & 20 \\2 & 20 & 30 \\3 & 30 & 40 \\4 & 40 & 50 \\5 & 50 & 60\end{array}$$

-Refer to Table 16.1. This salt processing firm is perfectly competitive and is forced to take damage costs into account. If the market price of the product is $30, the firm will produce

A) 0 tons of salt.
B) 2 tons of salt.
C) 3 tons of salt.
D) 4 tons of salt.

Question 36

The total cost to society of producing an additional unit of a good or service is the marginal

A) external cost.
B) damage cost.
C) social cost.
D) private cost.

Question 37

Refer to the data provided in Table 16.2 below to answer the following questions.
Table 16.2
$$\begin{array} { c c c } \text { Tons of Glass } & \text { MC } & \text { MSC } \\\hline 1 & 20 & 40 \\2 & 30 & 50 \\3 & 40 & 60 \\4 & 50 & 70 \\5 & 60 & 80 \\\hline\end{array}$$

-Refer to Table 16.2. To force this glass?recycling firm to produce the efficient level of output, the government should impose a tax

A) of $10 per ton.
B) of $12.50 per ton.
C) of $20 per ton.
D) that depends on the level of output that the firm produces to maximize profits.

Question 38

Refer to the data provided in Table 16.1 below to answer the following questions.
Table 16.1 $$\begin{array} { c l l } \text { Tons of Salt } & \text { MC } & \text { MSC } \\\hline 1 & 10 & 20 \\2 & 20 & 30 \\3 & 30 & 40 \\4 & 40 & 50 \\5 & 50 & 60\end{array}$$

-Refer to Table 16.1. To force this salt processing firm to produce the efficient level of output, the government should impose a tax

A) of $10 per ton.
B) of $12.50 per ton.
C) of $40 per ton.
D) that depends on the level of output that the firm produces to maximize profits.

Question 39

Refer to the data provided in Table 16.2 below to answer the following questions.
Table 16.2
$$\begin{array} { c c c } \text { Tons of Glass } & \text { MC } & \text { MSC } \\\hline 1 & 20 & 40 \\2 & 30 & 50 \\3 & 40 & 60 \\4 & 50 & 70 \\5 & 60 & 80 \\\hline\end{array}$$

-Refer to Table 16.2. The marginal damage costs imposed on society from processing 4 tons of glass are

A) $2.50 per ton of glass.
B) $10 per ton of glass.
C) $20 per ton of glass.
D) indeterminate from this output.

Question 40

It is assumed that the marginal benefit of consumption

A) remains constant as more units of the good are consumed.
B) increases as more units of the good are consumed.
C) decreases as more units of the good are consumed.
D) could either increase or decrease as more units of the good are consumed.

Question 41

In the presence of negative externalities, ________ is produced and in the presence of positive externalities, ________ is produced.

A) too little of the good; too much of the good
B) too much of the good; too little of the good
C) too much of the good; the right amount of the good
D) the right amount of the good; too little of the good

Question 42

The marginal private cost to a firm of producing the 10th unit of output is $100. The marginal social cost of the 10th unit of output is $150. The marginal damage cost of the tenth unit of output is

A) $5.00.
B) $25.00.
C) $50.00.
D) $250.00.

Question 43

Marginal damage cost is the

A) additional harm done by increasing the level of an externality-producing activity by one unit.
B) additional cost to society resulting from a privately owned firm producing one more unit of a product.
C) amount a consumer pays to produce an additional unit of a good.
D) additional cost to society resulting from a consumer consuming one more unit of a good.

Question 44

Refer to the information provided in Figure 16.3 below to answer the questions that follow. Figure 16.3
Refer to Figure 16.3. When Bill plays his saxophone he imposes costs on his wife. If Bill does not take these costs into consideration he will play his saxophone for ________ hours per day.

A) zero
B) three
C) four
D) seven

Question 45

The marginal private cost to a firm of producing the 10th unit of output is $100. The marginal damage cost of the 10th unit of output is $40. The marginal social cost of the tenth unit of output is

A) $40.
B) $60.
C) $140.
D) indeterminate from the given information.

Question 46

Refer to the information provided in Figure 16.4 below to answer the questions that follow. Figure 16.4
Refer to Figure 16.4. If this firm is maximizing profits and is not required to take into account damages, it will produce

A) 0 units of output.
B) 6 units of output.
C) 15 units of output.
D) 20 units of output.

Question 47

Refer to Scenario 16.1 below to answer the questions that follow.
SCENARIO 16.1: The marginal benefit for a particular food is described by MB = 30 - q,
where q refers to the quantity of the food. The marginal cost of producing the food is described by MC = 2q. There is a negative externality associated with food production and the marginal social cost of food production is MSC = 4q.
Refer to Scenario 16.1. The marginal damage cost is ________.

A) MDC = 2q
B) MDC = 6q
C) MDC = 8q
D) Indeterminate from the given information

Question 48

A person will continue to pursue an activity until his or her marginal ________ equals his or her marginal ________ cost.

A) benefit; damage
B) benefit; social
C) social cost; external
D) benefit; private cost

Question 49

Refer to the information provided in Figure 16.4 below to answer the questions that follow. Figure 16.4
Refer to Figure 16.4. At 20 units of output there are external

A) costs of $2 per unit.
B) benefits of $2 per unit.
C) costs of $5 per unit.
D) benefits of $5 per unit.

Question 50

If the government levies a tax on a chemical company that created an external social cost, the tax should equal marginal ________ to ensure an efficient correction.

A) private cost
B) social cost
C) benefit
D) damage cost

Question 51

If a firm's production process generates external costs, the firm will produce the socially efficient level of the output if the government imposes a tax equal to the marginal

A) damage cost.
B) private cost.
C) benefit.
D) social cost.

Question 52

As production increases, it is most likely that the marginal damage costs

A) remain constant.
B) increase.
C) decrease.
D) decrease or increase.

Question 53

Marginal private cost is the

A) additional cost to society resulting from a consumer consuming one more unit of a good.
B) additional cost to society resulting from a privately owned firm producing one more unit of a product.
C) amount that a consumer pays to produce an additional unit of a good.
D) the amount that a consumer pays to consume an additional unit of a particular good.

Question 54

If the government taxes a steel company by an amount equal to the damages of each marginal ton of steel, then the steel company's marginal cost curve is the same as the marginal

A) damage cost curve.
B) social cost curve.
C) private cost curve.
D) benefit cost curve.

Question 55

Refer to the information provided in Figure 16.3 below to answer the questions that follow. Figure 16.3
Refer to Figure 16.3. Bill and his wife are able to bargain with one another so that Bill plays his saxophone for the efficient number of hours. This is an example of

A) Arrow's impossibility theorem.
B) the free-rider problem.
C) the drop-in-the-bucket problem.
D) the Coase theorem.

Question 56

Refer to Scenario 16.1 below to answer the questions that follow.
SCENARIO 16.1: The marginal benefit for a particular food is described by MB = 30 - q,
where q refers to the quantity of the food. The marginal cost of producing the food is described by MC = 2q. There is a negative externality associated with food production and the marginal social cost of food production is MSC = 4q.
Refer to Scenario 16.1. The competitive output level is ________ and the competitive price is ________.

A) 10 units of food; $20
B) 6 units of food; $24
C) 0 units of food; $0
D) 4.29 units of food; $25.71

Question 57

Refer to the information provided in Figure 16.4 below to answer the questions that follow. Figure 16.4
Refer to Figure 16.4. The efficient level of output of this product is

A) 0.
B) 15.
C) 20.
D) indeterminate from this information.

Question 58

Refer to the information provided in Figure 16.3 below to answer the questions that follow. Figure 16.3
Refer to Figure 16.3. If Bill is forced to take into consideration the costs he imposes on his wife by playing the saxophone, he will play his saxophone for ________ hours per day.

A) zero
B) three
C) four
D) seven

Question 59

The amount that a consumer pays to consume an additional unit of a particular good is the marginal

A) private cost.
B) damage cost.
C) positive cost.
D) social cost.

Question 60

If the government wishes to encourage firms to internalize externalities, they should ________ activities resulting in negative externalities and ________ activities resulting in positive externalities

A) tax; subsidize
B) subsidize; tax
C) ban; generate
D) place an injunction against; tax

Question 61

For the efficient level of output to be produced, marginal

A) damage cost must equal zero.
B) benefit must equal marginal private cost.
C) social cost must be zero.
D) benefit must equal marginal social cost.

Question 62

Suppose that you rent a house next to a factory. The factory legally emits a chemical into the air that smells like feet. You now have to spend $300 more per month on air fresheners because the firm pollutes the air. You could move to another house far enough away from the factory, but the rent for that house is $200 more than you now pay. The efficient solution to this problem is that

A) the factory owner should compensate you $300 so that you can pay for the additional expenses you incur.
B) you should move to the new house because the additional rent on that new house is less than the additional expenses you incur from living next to the factory.
C) the factory owner should reimburse you $100, the difference between your expenses and the higher rent on the new house.
D) the firm should be able to continue to pollute because only one person is being harmed by the factory's pollution.

Question 63

If there are external costs of production and firms do not have to account for these costs, then the firms will ________ and ________ compared with the efficient values.

A) underproduce; underprice
B) underproduce; overprice
C) overproduce; underprice
D) overproduce; overprice

Question 64

When the government taxes a firm that generates external costs, the firm will produce

A) more units of output than before the tax was imposed in order to continue maximizing profits.
B) the same number of units of output as before the tax was imposed to continue maximizing profits.
C) fewer units of output than before the tax was imposed in order to continue maximizing profits.
D) either more or fewer units of output than before the tax was imposed depending upon what happens to the profit maximizing level of output.

Question 65

Taxes on a producing firm's spillovers

A) are designed to make it easier for economists to measure spillovers.
B) will lead to a zero level of output.
C) are simply meant to force decision makers to consider the full costs of their actions.
D) are designed primarily as a way to raise money so that the government can compensate the victims of the externality.

Question 66

The Coase theorem states that

A) the private sector will fail to produce the efficient amount of a public good because of the free-rider problem.
B) under certain conditions, private parties can arrive at the efficient solution without government involvement.
C) if there are external costs in production, the government must intervene in the market to assure that the efficient level of output is produced.
D) public goods should be produced up to the point where the additional benefit received by society equals the additional cost of producing the good.

Question 67

For the Coase theorem to apply, all of the following conditions must be satisfied EXCEPT:

A) The basic rights of the individuals must be clearly understood.
B) There must be no impediments to bargaining.
C) Only a few people can be involved.
D) Liability rules must be established and enforced.

Question 68

If a tax is imposed on externality-producing activities by perfectly competitive firms so that the market is producing the efficient level of output, then

A) P = MSC and MDC = 0.
B) P = MSC and MDC > 0.
C) P = MC and MDC = 0.
D) P = MC and MDC > 0.

Question 69

When a perfectly competitive firm weighs price and marginal cost and no externalities exist, it is weighing the full benefits to ________ of additional production against the full costs to ________ of that production.

A) society; society
B) buyers; sellers
C) sellers; buyers
D) government; government

Question 70

Education generates external benefits. When these external benefits are not considered, the market will produce

A) an efficient level of education.
B) more than the efficient level of education.
C) less than the efficient level of education.
D) zero units of education.

Question 71

If a tax is placed on perfectly competitive firms that impose external costs on society, the firm's marginal cost curve will shift ________ and the industry supply curve will shift to the ________.

A) down; left
B) down; right
C) up; right
D) up; left

Question 72

Refer to Scenario 16.1 below to answer the questions that follow.
SCENARIO 16.1: The marginal benefit for a particular food is described by MB = 30 - q,
where q refers to the quantity of the food. The marginal cost of producing the food is described by MC = 2q. There is a negative externality associated with food production and the marginal social cost of food production is MSC = 4q.
Refer to Scenario 16.1. The efficient output level is ________ and the efficient price is ________.

A) 10 units of food; $20
B) 6 units of food; $24
C) 0 units of food; $0
D) 4.29 units of food; $25.71

Question 73

When the government imposes a tax on a firm that generates external costs, the tax is

A) always borne entirely by the firm.
B) always borne entirely by the consumer.
C) usually borne by both the firm and the consumer.
D) borne only by the government.

Question 74

Once a firm is made to internalize a negative externality, the price will

A) increase and output will decrease.
B) increase and output will increase.
C) decrease and output will decrease.
D) decrease and output will increase.

Question 75

If a subsidy is granted to perfectly competitive firms that provide external benefits to society, the firm's marginal cost curve will shift ________ and the industry supply curve will shift to the ________.

A) down; left
B) down; right
C) up; right
D) up; left

Question 76

An external cost is

A) MSC + MC.
B) MSC ‐ MC.
C) MSC/ MC.
D) MSC × MC.

Question 77

If private bargaining to resolve an externality is to result in an efficient outcome,

A) rights must be protected by liability rules.
B) there must be tradable pollution rights.
C) there must be direct regulation of externalities.
D) the initial assignment of rights must be clear to both parties.

Question 78

If the production of a good generates external benefits, the government could increase efficiency by

A) taxing the production of the good to reduce the amount produced.
B) subsidizing production of the good to increase the amount produced.
C) regulating production of the good to reduce the amount produced.
D) requiring all producers of the product to be licensed to produce the product.

Question 79

You spend $300 every month to keep your lawn and garden maintained. Your neighbor has told you that she derives $50 a month in enjoyment from being able to look at your beautiful yard. Which of the following is true?

A) You are spending too much on your yard, because your neighbor derives only $50 worth of benefits.
B) You should refuse to spend anything on your yard unless your neighbor pays you $50 a month.
C) If you took into consideration the benefits your neighbor derived, the efficient level of lawn maintenance would be greater than $300 a month.
D) If you took into consideration the benefits your neighbor derived, the efficient level of lawn maintenance would be less than $300 a month.

Question 80

Property rights are protected by

A) taxes and subsidies.
B) bargaining and negotiation.
C) injunctions and liability rules.
D) rivalry and excludability.