When There Is a Positive Externality Associated with the Watering

question 203

Multiple Choice

When there is a positive externality associated with the watering of one's lawn, the free market results in:

• A) not enough lawn watering.
• B) too much lawn watering.
• C) the socially optimal level of lawn watering.
• D) people watering each other's lawns.
• E) government subsidies for lawn watering.

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Definitions:

Housing

The structures or accommodations in which people live, including houses, apartments, and other residential units.

Producer Price Index

An economic indicator that measures the average change over time in the selling prices received by domestic producers for their output.

Basket Of Goods

A fixed set of consumer products and services valued on a regular basis for the purpose of tracking inflation through the consumer price index (CPI).

Firms

Businesses or economic entities engaged in commercial, industrial, or professional activities.