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Unformatted text preview: lution into the Big River. This leads to higher
costs and disruption for fisherman on the lake, for which they are not compensated. In
gain the to the
this situation, we can assume that:
A) the ideal amount of society's resources is being used to produce plastic.
gainer is greater
than the loss to the B) there is an external benefit to society from plastic production.
C) too many of society's resources are being used to produce plastic.
loser). If the gain to D) too few of society's resources are being used to produce plastic.
the gainer is greater
the individuals costs are lower than the society's costs
than the loss to the
83. The presence of an external negative effect implies the market is failing.
loser my wife can
difference between externality and external effect.
pay me an amount B) False
External effect- actions of one economic agent effect others in society
externality- an external effect whose cost has not been internalized by the producer
84. The MRT (marginal rate of transformation) i...
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- Fall '07