A Familiar Example of a Negative Externality Is Loud Music

question 31

Multiple Choice

A familiar example of a negative externality is loud music on a college campus.In principle,it should be possible to internalize this externality by permitting students to negotiate rights to play music during particular times.The most likely reason that these negotiations do NOT happen is that:

• A)most students are unfamiliar with the Coase theorem.
• B)the transaction costs associated with identifying and establishing communication with students would be high.
• C)music is an experience,not a good.
• D)some students don't view loud music as a negative externality.

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Labor Hours

A measure of the amount of work or effort in terms of hours spent by workers in producing goods or providing services.

Profitable Use

The utilization of resources or assets in a way that generates a financial gain.

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production, such as salaries of supervisors and rent of the factory.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted; it contributes towards covering fixed costs and generating profit.