Externalities are unintended costs or benefits that are imposed on unsuspecting people and that result from:
a. poor planning.
b. intentional damages.
c. excessive costs.
d. excessive losses.
e. the economic activity of others.
Question 2
The Yankee Candle Company, in Hatfield, Massachusetts, makes thousands of scented candles each day. The factory emits the odor of the candles it produces, some of which smell quite nice. On days when they make strawberry candles the townspeople really enjoy the smell. On days when they make potpourri scented candles, people close their windows and don't go outside. What can we infer about the scented candle market?
a. b and c.
b. Strawberry candles are more expensive than is socially optimum.
c. Potpourri candles are priced too low to be socially optimum.
d. Candle production generates only negative externalities.
e. Candle production technologies are inefficient.
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