Question

The lease on Allison's apartment will expire next month and she wants to move closer to campus. There are two apartments that she likes. Both are close to campus and in her price range. The first one is next door to a garage where local bands often practice late at night. The second one is next door to a donut shop that opens at 5 a.m.
a.If she likes to stay up late and loves listening to all kinds of music, she will view the bands practicing as a(n)______.
b.If she is a morning person and loves the smell of donuts, she will view the donut shop as a(n)______.
c.If her roommate hates loud music and the smell of donuts makes her sick, she will reject both apartments due to what she sees as______.

Answer 1

Answer:    A. and B. External benefit

                 C. External cost

Explanation:    Since we don't know if Alison likes the music that the band plays, and we don't know if she likes to stay up late, or whether she likes to wake up early with the smell of donuts, we will assume that she will enjoy any option in what she chose. Specifically in both these cases, what she will get with the rented apartment will be external benefit as she will get them with the apartment for the price of a monthly rent, so the smell of donuts and music late into the night will get for free.

If her roommate does not like the late music of the neighbourhood band, and smells of donuts make her sick, then Alison will have to give up both of these apartments, which, as it says, fit into her ability to pay, so she will have to look for a third apartment that is likely to come out of the price range that she could not afford without difficulty, that is, it will have external costs for an apartment that is likely to be more expensive.