Which of the Following Is Most Likely to Generate an Externality

question 16

Multiple Choice

Which of the following is most likely to generate an externality

• A)Teachers at a local high school purchase a coffee maker for the staffroom.
• B)A couple with young children moves next door to the children's grandparents.
• C)A newlywed couple buys furniture for their condo.
• D)John buys a tractor to mow his newly purchased five-hectare lot.

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Definitions:

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to assess their purchasing power equivalency.

Big Mac Index

An informal measure of purchasing power parity between two currencies, calculated by comparing the price of a McDonald's Big Mac burger in different countries.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach, adjusting for the cost of living and inflation rates to determine relative currency values.

Exchange Rates

The value of one currency for the purpose of conversion to another.