When external benefits are present,
A) competitive markets are efficient.
B) competitive markets are inefficient.
C) a tax is required to eliminate the inefficiency.
D) property rights have already been established.
Question 2
Katy has an ailing and wealthy, but miserly, parent. The parent has told Katy that if she takes care of him until he dies, then she will get 100,000 in inheritance.
Katy knows that there is only a 50-50 chance that her father will leave her the full amount or nothing. To take care of her father, she has to take a job that pays 30,000 where her current job pays her 70,000 per year. If her father is expected to pass away in 1 year, what is Katy's expected wealth if she takes care of her father? A) 130,000
B) 90,000
C) 80,000
D) 70,000
