Subpart (a):
Classifying private and external costs and their benefits.
Subpart (a):
Explanation of Solution
The
Concept Introduction:
Private Cost: A private cost is a cost paid by the consumer or producer trading in the market.
Subpart (b):
Classifying private and external costs and their benefits.
Subpart (b):
Explanation of Solution
The benefit your neighbor receives from hearing you play your pleasant music is external benefit.
Concept Introduction:
Private benefit: A private benefit is the benefit received by a consumer or producer trading in the market.
Subpart (c):
Classifying private and external costs and their benefits.
Subpart (c):
Explanation of Solution
The annoyance of your neighbor because she does not like your achingly conventional music is external cost.
Concept Introduction:
External Cost: An external cost is the cost paid by people other than the consumer or producer trading in the market.
Subpart (d):
Classifying private and external costs and their benefits.
Subpart (d):
Explanation of Solution
The pleasure you receive from listening to your iTunes download is private benefit.
Subpart (e):
Classifying private and external costs and their benefits.
Subpart (e):
Explanation of Solution
The price you pay for a security system for your home is private cost.
Subpart (f):
Classifying private and external costs and their benefits.
Subpart (f):
Explanation of Solution
The safety you enjoy as a result of having the security system is private benefit.
Subpart (g):
Classifying private and external costs and their benefits.
Subpart (g):
Explanation of Solution
The crime that is more likely to occur to your neighbour once a criminal sees a “Protected by alarm” sticker on your window is external cost.
Subpart (h):
Classifying private and external costs and their benefits.
Subpart (h):
Explanation of Solution
The extra safety your neighbour might experience because criminals tend to stay away from neighbourhoods that have many burglar alarms is external benefit.
Concept Introduction:
External benefit: An external benefit is the benefit received by people other than the consumer or producer trading in the market.
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Chapter 10 Solutions
EBK MODERN PRINCIPLES OF ECONOMICS
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