Question

Ten friends who love to ski decide to pool their financial resources and equally share the cost of a one-week time-share condominium in Alta, Utah. Suppose that the lift lines at the ski resort become more congested when the ten additional people start to ski. Which of the following statements is not correct?

a. Each of the ten friends would have been better off staying at home.
b. Use of the ski resort by the ten new skiers will yield a negative externality.
c. An increase in lift ticket prices could be viewed as a corrective tax on the externality of congestion.
d. The ski resort can reduce the congestion externality by raising lift ticket prices.

Answer 1

A) Each of the ten friends would have been better off staying at home.

Step-by-step explanation:

This statement is NOT correct because:

1. Inasmuch as the ten friends love skiing, staying back at home wouldn't be beneficial.

2. Even if the ten friends stay at home, other skiers who are available will take their slots.

3. If the fee has been paid already, they will be on the losing side except if there are refunds.

Answer 2

A) Each of the ten friends would have been better off staying at home.

Step-by-step explanation: