Ten friends who love the beach decide to pool their financial resources and equally share the cost of a one-week time-share condominium in San Diego,California.Suppose that the beach outside of the condominium becomes more congested when the ten additional people join the other beachgoers.Which of the following statements is not correct?
A) Use of the beach by the ten new beachgoers will yield a negative externality.
B) The beach can reduce the congestion externality by raising the fee to access the beach.
C) An increase in the fee to access the beach could be viewed as a corrective tax on the externality of congestion.
D) Each of the ten friends would have been better off staying at home.
Correct Answer:
Verified
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