QUESTION 7 Property prices are influenced by a variety of factors. One of these factors is the crime rate in the surrounding area. Sam is a property developer, who develops properties in Fortitude Valley. Crime is a serious issue affecting Fortitude Valley. In order to reduce the amount of crime occurring in the area, Sam organises a neighbourhood watch program. This program relies on property owners monitoring their own neighbourhood, including other residents' properties, and reporting any suspicious activities to police. Which of the following statements are true: Sam's decision to organise a neighbourhood watch program has nothing to do with externalities. Sam's decision to organise a neighbourhood watch program is a negative externality for a shop owner called Al. Previously, Al had to pay money to other Fortitude Valley shop owners for protection against crime. Sam's decision to organise a neighbourhood watch program is a positive externality for Pete - a shop owner who has been robbed several times previously. The neighbour watch program would be economically inefficient if the marginal benefits were greater than the marginal costs. QUESTION 8 Johnny is deciding whether to study hard at university to then get a job or pursue a life of laziness by living off his parents for the rest of his life. Select the item from the list provided to make the following statements true. When deciding whether to go to university, Johnny is likely to consider only his 1. Negative externality benefit. 2. Positive externality 3. Tax To ensure an efficient number of people obtain a university education it is necessary to 4. Subsidise consider the benefit. 5. Command and control To encourage more university students to enrol, the government should university 6. Negotiate education. 7. Possible 8. Impossible 9. Private 10. Efficient 11. Inefficient 12. Social