Chapter 1 Solutions:
2. When the benefits of something are psychological, such as going on a vacation, it is not
easy to compare benefits to costs to determine if it is worth doing. But there are two ways to
think about the benefits. One is to compare the
A. The "externality" is the noise caused by playing rock'n'roll.
B. The landlord can impose a policy against loud noises. People could reduce the noise level only enough to
satisfy the landlord.
C. They might be able to reach a mutually agreeable situatio
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Mankiw Chapter 10
SOLUTIONS TO TEXT PROBLEMS:
1. Examples of negative externalities include pollution, barking dogs, and consumption of
alcoholic beverages. Examples of positive externalities include restoring historic buildings,
S olutions to Quick Quizzes
the frontier), point B is an inefficient point (inside the frontier),
and point C is an infeasible point
(outside the frontier).
1. There are many possible answers.
1. Economics is like a science because
Eco200: Practice Test 2
Covering Chapters 10 through 15
Four roommates are planning to spend the weekend in their dorm room watching old movies, and they
are debating how many to watch. Here is their willingness to pay for each film: