Question 1

Beverly owns a rabbit and receives a $600 benefit from owning it. Sometimes Beverly's rabbit makes its way onto the lawn of her neighbor, Charles, and eats the vegetables in Charles' garden. This intrusion by the rabbit costs Charles $400. Can both individuals become better off if Charles pays Beverly some amount of money to get rid of the rabbit? Explain.

Accepted Answer

The answer of Beverly owns a rabbit and receives a...

Question 2

Which theorem asserts that private economic actors can often solve the problem of externalities among themselves?

Accepted Answer

The answer of Which theorem asserts that private economic actors...

Question 3

An example of a private solution to externalities is charities. The government encourages this private solution by allowing .

Accepted Answer

The answer of An example of a private solution to...

Question 4

In some situations, private economic actors cannot solve the problem of externalities among themselves because of substantial costs.

Accepted Answer

The answer of In some situations, private economic actors cannot...

Quiz 10: Externalities

Which theorem asserts that private economic actors can often solve the problem of externalities among themselves?

An example of a private solution to externalities is charities. The government encourages this private solution by allowing .

In some situations, private economic actors cannot solve the problem of externalities among themselves because of substantial costs.