9. Private solutions to correct for externalities Consider the following scenario: Suppose that a brewery enjoys a large increase in customers whenever the blues bar next door features a band playing live music, because it can be easily heard from the brewery. The blues bar owner decides to purchase the brewery so that he can internalize this positive externality. Which of the following private solutions resolving the externality of live music took place in this scenario? Moral codes and social sanctions Contracts Charities Integration of different types of businesses through merger or acquisition Keep in mind that sometimes private solutions to externalities are not achieved. For instance, this could occur when communications barriers or social customs are important enough relative to the potential gains involved that 9. Private solutions to correct for externalities Consider the following scenario: Suppose that a brewery enjoys a large increase in customers whenever the blues bar next door features a band playing live music, because it can be easily heard from the brewery. The blues bar owner decides to purchase the brewery so that he can internalize this positive externality. Which of the following private solutions resolving the externality of live music took place in this scenario? Moral codes and social sanctions Contracts Charities the government should never step in Integration of different types of businesses through merger or ac a private solution is not feasible Keep in mind that sometimes private solutions to externalities are not achie customs are important enough relative to the potential gains involved that the market system has a crisis communications barriers or social
9. Private solutions to correct for externalities Consider the following scenario: Suppose that a brewery enjoys a large increase in customers whenever the blues bar next door features a band playing live music, because it can be easily heard from the brewery. The blues bar owner decides to purchase the brewery so that he can internalize this positive externality. Which of the following private solutions resolving the externality of live music took place in this scenario? Moral codes and social sanctions Contracts Charities Integration of different types of businesses through merger or acquisition Keep in mind that sometimes private solutions to externalities are not achieved. For instance, this could occur when communications barriers or social customs are important enough relative to the potential gains involved that 9. Private solutions to correct for externalities Consider the following scenario: Suppose that a brewery enjoys a large increase in customers whenever the blues bar next door features a band playing live music, because it can be easily heard from the brewery. The blues bar owner decides to purchase the brewery so that he can internalize this positive externality. Which of the following private solutions resolving the externality of live music took place in this scenario? Moral codes and social sanctions Contracts Charities the government should never step in Integration of different types of businesses through merger or ac a private solution is not feasible Keep in mind that sometimes private solutions to externalities are not achie customs are important enough relative to the potential gains involved that the market system has a crisis communications barriers or social
Chapter3: Economic Decision Makers
Section: Chapter Questions
Problem 3.12P
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Transcribed Image Text:9. Private solutions to correct for externalities
Consider the following scenario:
Suppose that a brewery enjoys a large increase in customers whenever the blues bar next door features a band playing live music,
because it can be easily heard from the brewery. The blues bar owner decides to purchase the brewery so that he can internalize this
positive externality.
Which of the following private solutions resolving the externality of live music took place in this scenario?
Moral codes and social sanctions
Contracts
Charities
Integration of different types of businesses through merger or acquisition
Keep in mind that sometimes private solutions to externalities are not achieved. For instance, this could occur when communications barriers or social
customs are important enough relative to the potential gains involved that
Transcribed Image Text:9. Private solutions to correct for externalities
Consider the following scenario:
Suppose that a brewery enjoys a large increase in customers whenever the blues bar next door features a band playing live music,
because it can be easily heard from the brewery. The blues bar owner decides to purchase the brewery so that he can internalize this
positive externality.
Which of the following private solutions resolving the externality of live music took place in this scenario?
Moral codes and social sanctions
Contracts
Charities
the government should never step in
Integration of different types of businesses through merger or ac
a private solution is not feasible
Keep in mind that sometimes private solutions to externalities are not achie
customs are important enough relative to the potential gains involved that
the market system has a crisis
communications barriers or social
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