Homework - 4. Which is an example of a positive...

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Homework 1. Shares of ownership in corporations are referred to as: Limited liability, Collateral, Stocks, Bonds. 2. One major advantage of limited liability is that it: Is not subject to a free-rider problem, Is not subject to a principal-agent problem, Has unlimited profit sharing among the firm's owners, Shields the personal assets of owners from liability claims. 3. An example of a negative externality created by the market system would be: Poverty, Unemployment, Income inequality, Environmental pollution.
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Unformatted text preview: 4. Which is an example of a positive externality? A neighbor's dog who likes to bark and run in your yard, A sewage treatment plant that emits strong odors, A flood control dam that provides a recreational lake, A parking garage next to a public library. 5. Public goods are defined by the two characteristics of: Nonrivalry and nonexcludability, Double taxation and limited liability, Spillover benefit and spillover cost, The free-rider problem and the principal-agent problem. 6....
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