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Which of the Following "Externalities" Does Not Distort the Allocation

Question 5

Multiple Choice

Which of the following "externalities" does not distort the allocation of resources?
I.An individual's unwillingness to cut his or her own lawn in an otherwise immaculately kept neighborhood.
II.Smoke produced by a new firm in an area that raises the costs of other firms.
III.A new firm's bidding up skilled wages in an area,thus raising costs of other firms.
IV.An individual's unwillingness to obtain job training,thereby lowering the total GNP.


A) I, III, and IV.
B) III and IV.
C) II only.
D) IV only.

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