Author Question: What the economist calls externalities create social problems A) because opportunity costs are ... (Read 93 times)

Melani1276 · **on:** Jun 29, 2018

What the economist calls externalities create social problems

A) because opportunity costs are low when people live close to one another.
B) only when the externalities are negative spillovers.
C) partly because people have a limited ability to empathize.
D) when people know about all the consequences of their behavior.

Question 2

What are the different steps involved in optimization in differences?

What will be an ideal response?

ririgirl15 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

Optimization in differences has three steps:
a) Translate all costs and benefits into common units, like dollars.
b) Calculate the marginal consequences of moving between alternatives.
c) Apply the Principal of Optimization at the Margin by choosing the alternative with the property that moving to it makes you better off and moving away from it makes you worse off.