Exhibit 15-1 -Suppose That People Value the Continued Presence of Certain Species

question 111

Multiple Choice

Exhibit 15-1
-Suppose that people value the continued presence of certain species of animals in rural areas, but home-building in those areas reduces the populations of the animals. Home-building creates

• A)a positive externality.
• B)a negative externality
• C)a positive internality.
• D)a negative internality.
• E)a free-rider problem.

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Definitions:

Subjective Measure

A type of data collection or evaluation based on personal opinions, interpretations, points of view, emotions, and judgment.

Present Value

The present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Interest

The cost of borrowing money, typically expressed as a percentage rate over the period of the loan, or the return earned on investments.

Annual Interest

The amount of interest paid or earned over one year, often expressed as a percentage of the principal.