Suppose a wallet firm has been dumping its wastes into the local river. The government finds out and insists that the firm pay for the cost of the river cleanup. As a result, we can expect:
a. more wallets to be produced at a lower price.
b. more wallets to be produced at a higher price.
c. fewer wallets to be produced at a lower price.
d. fewer wallets to be produced at a higher price.
e. the same number of wallets to be produced at a higher price.
Question 2
John paints the exterior of his house and, as a result, his neighbor Christine is able to sell her home for 5,000 more than she could have before. John's house painting:
a. creates a negative externality for Christine.
b. shows John is a free rider.
c. results in an efficient market outcome for both.
d. creates a positive externality for Christine.
e. was poorly done.
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Christo, Over the River, Project for the Arkansas River, State of Colorado.
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