Question

2. ​Josiah installed a metal sculpture in his front yard. A positive externality arises if the sculpture

a. ​increases the value of other properties in the neighborhood.

b. ​increases the value of Josiah’s home.

c. ​is visually unappealing to Josiah’s neighbors.

d. ​creates a safety hazard for neighborhood children.

3.You and your friends watch a movie in your bedroom. For you and your friends, the enjoyment that you get from watching the movie is not rival in consumption.

a. True
b. False

4. Economists make assumptions to

a. mimic the methodologies employed by other scientists.

b. minimize the number of experiments that yield no useful data.

c. minimize the likelihood that some aspect of the problem at hand is being overlooked.

d. focus their thinking on the essence of the problem at hand.

6.When a transaction between a buyer and seller directly affects a third party, the effect is called an externality.

a. True
b. False

7. Harry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable. Which of the following costs are most likely to be considered fixed costs?

a. the cost of mustard

b. the cost of hotdog buns

c. wages paid to workers who sell hot dogs

d. the cost of bookkeeping services

Answer 1

a) "C"

is visually unappealing to Josiah’s neighbors.

b) True, as both of them are getting same utility and if a third person was watching it they will get the same utility from it

c) "D"

focus their thinking on the essence of the problem at hand.

d) True, when an economic transaction between two people affect the third person it will be considered as economic externality.

e) "D"

bokkeeping is not affected by day to day fall or rise in the demand or sales, it is fixed cost.