There Are 12 Families in a Gated Community That Are

question 102

Multiple Choice

There are 12 families in a gated community that are affected by air pollution from a local factory. The pollution could be reduced if the company spent $24,000 on upgraded ventilators. The company agrees to install the ventilators if the affected families contribute the $24,000. Since there are no legal restrictions governing the factory's air pollution the negotiations fail. This outcome is an example of the

• A) free-rider problem.
• B) drop-in-the-bucket problem.
• C) Coase theorem.
• D) problem that arises when property rights are not defined.

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Definitions:

Temptation

The desire to perform an action that one may enjoy immediately or in the short term but will probably regret later for various reasons.

Beliefs

Convictions or acceptances that something exists or is true, particularly without proof.

Social-cognitive Theory

A theory that emphasizes the importance of observational learning, imitation, and modeling in understanding and acquiring behaviors, attitudes, and emotional responses.

Moral Competence

The ability to understand moral issues and apply ethical principles to make decisions.