Asked by Bimala Sharma Acharya on Jul 11, 2024
Verified
Which of these activities will most likely result in an external benefit?
A) A college student buys a deck of cards to play solitaire in her dorm room.
B) An elderly woman plants a flower garden on the vacant lot next to her house.
C) An executive purchases a book to read on a business trip.
D) A ten-year-old uses his allowance to buy new Nike shoes.
External Benefit
A positive effect or advantage experienced by someone who is not directly involved in producing or consuming a good or service.
Elderly Woman
A female individual of advanced age, often considered to be in the later stages of her lifespan.
Flower Garden
A designed space used specifically for the cultivation and display of flowers and other ornamental plants.
- Gain insights into the principle of externalities and their repercussions for society.
Verified Answer
WJ
William JackmanJul 14, 2024
Final Answer :
B
Explanation :
Planting a flower garden on a vacant lot next to her house creates a visual and environmental benefit for the community that is not fully captured by the individual's private benefit. Other people passing by can enjoy the beauty of the garden and benefit from the increased oxygen production and carbon dioxide absorption. This is an example of an external benefit, which is a positive impact on society as a whole that is not reflected in the market price or the individual's decision-making process.
Learning Objectives
- Gain insights into the principle of externalities and their repercussions for society.