A Paint Firm Has Just Announced That It Will Be

question 42

Multiple Choice

A paint firm has just announced that it will be building a new plant in a small town that is currently experiencing a high level of unemployment. The new plant will create 500 new jobs in the area and will occupy unused land at the edge of town. The plant will also dump some harmful chemicals into the town's river. From an economic standpoint this dumping of chemicals

• A) is unimportant since the firm is reducing the unemployment in the region.
• B) creates a negative externality.
• C) is the production of a public good.
• D) creates a positive externality.

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Definitions:

Own Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, ceteris paribus.

Cell Phones

Portable electronic devices that enable users to make voice calls, send text messages, and access various forms of digital media and internet services.

Pay Phone Industry

The business sector involved in providing public telephones that operate with the insertion of coins or by credit card payments.

Unitary Elastic

In economics, it describes a situation where a change in the price of a good or service results in a proportional change in the quantity demanded or supplied.