A Meditation Class Meets on the Second Floor of a Building;

question 97

Multiple Choice

A meditation class meets on the second floor of a building; the first floor is a nightclub.The loud music from the club disturbs the classes.Which of the following best explains why the negative externality faced by the class arises?

• A)The class has no property right to a quiet environment.
• B)The club has a property right on the ground floor.
• C)The class has a property right on the second floor.
• D)The club uses an inappropriate technology (i.e., no soundproofing).
• E)Both the club and class are profitable.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or output, such as raw materials and direct labor.

Transfer Price

The price at which goods and services are sold between divisions within the same company, often used for accounting and tax purposes.

Variable Cost

A cost that varies directly and proportionally with changes in production volume or activity level, such as materials and labor costs.

Profit Margin

The ratio of a company's net income to its revenue, indicating the percentage of profit made from sales.