Which of the following describes an externality and which does not? Explain the difference. a. A policy
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a. A policy of restricted coffee exports in Brazil causes the U.S. price of coffee to rise—an increase which in turn also causes the price of tea to rise.
b. An advertising blimp distracts a motorist who then hits a telephone pole.
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a Externalities cause inefficiencies because the price of the good does not reflect th...View the full answer
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