Author Question: An example of an activity that is likely to generate benefit (positive) externality is A) a well ... (Read 64 times)

panfilo · **on:** Jul 1, 2018

An example of an activity that is likely to generate benefit (positive) externality is

A) a well manicured lawn of your neighbor.
B) growing wild flowers on city street islands.
C) fireworks on the 4th of July.
D) an educated workforce.
E) All of the above

Question 2

Explain why risk can be insured against but uncertainty cannot.

What will be an ideal response?

ladyjames123 · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

E

Answer to Question 2

The provider of insurance policies can assign probabilities to the occurrences of insurable events and calculate premium rates to charge. With uncertainty, no probabilities can be attached to such events and it isn't possible to construct the appropriate premium rates.