When Bill Started Working in His New Office,he Found the Noise

question 156

Essay

When Bill started working in his new office,he found the noise of the air purifier in his room distracting and felt it interfered with his ability to concentrate.After a week or so,the noise stopped bothering him,even though it was still present.Explain the concept that is most likely responsible for Bill's reaction to the noise after a week.

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Definitions:

External Costs

Costs incurred by a third party as a result of an economic transaction that are not reflected in the transaction's price.

Product Differentiation

A strategy in which one firm’s product is distinguished from competing products by means of its design, related services, quality, location, or other attributes (except price).

Economic Profits

Economic Profits represent the excess returns a firm makes above its opportunity costs, accounting for both explicit and implicit costs.

External Costs

Costs that are not borne by the producers or users of a good or service but by third parties or society at large, such as pollution.