On the Fourth of July, There Is No Fireworks Display

question 28

Multiple Choice

On the Fourth of July, there is no fireworks display in the small town of Yankeeville, even though it would be efficient for such a display to be produced. Which of the following statements is correct?

• A)The lack of a fireworks display in Yankeeville arises because of an externality.
• B)The lack of a fireworks display in Yankeeville arises because the free-rider problem does not apply to goods such as fireworks displays.
• C)In deciding not to produce a fireworks display in Yankeeville, private individuals and private firms made decisions that were privately irrational.
• D)All of the above are correct.

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Definitions:

Standard Deviation

A measure of the dispersion or variability in a set of data points, indicating how much the observations differ from the mean of the data set.

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Short-term government securities issued at a discount from their face value, maturing in a year or less.

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