Consider a factory, located in the middle of nowhere, producing a nasty smell. As long as no one is around toexperience the unpleasant odor, are any externalities produced? Suppose that there was family next door to the smelly factory. Do we now have an externalities problem?Suppose that the family clearly possesses the right to a pleasant-smelling environment. Does this mean thatthe factory will be required to stop producing the bad smell? What can be a private solution to this problem?
Consider a factory, located in the middle of nowhere, producing a nasty smell. As long as no one is around toexperience the unpleasant odor, are any externalities produced? Suppose that there was family next door to the smelly factory. Do we now have an externalities problem?Suppose that the family clearly possesses the right to a pleasant-smelling environment. Does this mean thatthe factory will be required to stop producing the bad smell? What can be a private solution to this problem?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Consider a factory, located in the middle of nowhere, producing a nasty smell. As long as no one is around to
experience the unpleasant odor, are any externalities produced?
Suppose that there was family next door to the smelly factory. Do we now have an externalities problem?
Suppose that the family clearly possesses the right to a pleasant-smelling environment. Does this mean that
the factory will be required to stop producing the bad smell? What can be a private solution to this problem?
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