Question

Billy spends a lot of time gardening. As a result, he has a very nice garden. This can result in

A) a positive externality since Billy enjoys looking at his flowers

B) a positive externality since Billy's neighbors also enjoy looking at his flowers

C) a negative externality since Billy has to pay for his flowers

D) a negative externality since Billy enjoys looking at his flowers

2. According to the circular flow diagram, which of the following are true?

A) The buyers of resource services are households.

B) The sellers of resource services are firms.

C) Revenue is the money received by firms for goods and services.

D) Investment is the money received by households for providing resource services.

3. Chip and Dale run separate logging companies in the same forest. Both pollute the river flowing through the forest with debris from their work. In the table below, the first row shows the current level of debris that makes its way into the river from their work. The following rows show how much it would cost each logger to reduce its pollution by additional increments of 10 pounds. If the government imposes a pollution tax of $7 for each 10 pounds of debris, total pollution will fall by ____ pounds, at a total cost of

Current debris in pounds	60	80
Cost of reducing debris by 10 pounds	$5	$2
Cost of reducing debris by a second 10 pounds	$10	$4
Cost of reducing debris by a third 10 pounds	$15	$6
Cost of reducing debris by a fourth 10 pounds	$20	$8
Cost of reducing debris by a fifth 10 pounds	$25	$10

A) 40, $28

B) 40, $17

C) 40, $22

D) 60, $30

Tim has a bakery business. He hires his son Casey as a cashier and saves the money he makes at a bank. Tim is participating in

A) a product market.

B) a resource (factor) market.

C) a financial market.

D) all of the above

Answer 1