Exhibit 15-1 
-Suppose that people value the continued presence of certain species of animals in rural areas, but home-building in those areas reduces the populations of the animals. Home-building creates
A) a positive externality.
B) a negative externality
C) a positive internality.
D) a negative internality.
E) a free-rider problem.
Correct Answer:
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Q42: Exhibit 15-1 Q43: When a good is produced or consumed, Q44: Marginal social cost minus marginal external cost Q46: A negative externality occurs when the purchase Q47: Suppose that the production of a good Q48: In a competitive market with a negative Q49: An example of a positive externality is Q50: An externality is the effect that occurs
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