Jack wants to buy a new house.But the surge in housing demand over the past few months has led to a sharp increase in housing prices,making it impossible for him to buy one on his current income.This is an example of a ________.

Question

Quizplus · Accepted Answer

A pecuniary externality refers to the effect of a change in the price of a good or service on the quantity demanded or supplied of that good or service. In this case, the increase in housing demand has led to an increase in housing prices, which has made it difficult for Jack to buy a house on his current income. This is an example of a pecuniary externality because the increase in prices has affected the amount of housing that Jack can afford to buy.

Jack Wants to Buy a New House