Suppose a Large Tree on Adam's Property Blocks Eve's View

question 299

Multiple Choice

Suppose a large tree on Adam's property blocks Eve's view of the ocean. Adam accepts Eve's offer of $15,000 to cut down the tree. This is an example of

• A) internalizing externalities via voluntary agreements.
• B) a result of logrolling.
• C) a consequence of a positive externality.
• D) a consequence of private costs exceeding social costs.

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Definitions:

Market Return

The total return, including capital gains and dividends, from investing in a broad market index over a specified period.

IPO Pops

The phenomenon where the price of a stock rises significantly above its initial public offering price shortly after it starts trading on the public market.

Secondary Market

This is a market where investors buy and sell securities they already own, as opposed to the primary market where securities are first issued.

Retail Investors

Individual investors who buy and sell securities for their personal accounts, not for another company or organization.