What are pecuniary externalities? Explain with the help of an ...

[JMatthes]

What are pecuniary externalities? Explain with the help of an example.
 
  What will be an ideal response?

Question 2

Which of the following is likely to be observed among unemployed individuals if the government offers generous unemployment benefits?
 
  A) Higher motivation to look for a job
  B) Increased acceptance of low-paying jobs
  C) Lower current consumption
  D) Reduced motivation to look for a job

[mcabuhat]

Answer to Question 1

A pecuniary externality occurs when a market transaction affects others through market prices. For example, if a large number of consumers decide to purchase a car, the price of the car will increase due to an increase in demand. This creates a pecuniary externality for other potential buyers of the car in the form of higher prices.

Answer to Question 2

D

[JMatthes]

Thanks for the timely response, appreciate it

[mohan]

Excellent