A meditation class meets on the second floor of a building; the first floor is a nightclub. The loud music from the club disturbs the classes. The club could be soundproofed for a cost of $5,000 or move at a cost of $8,000 . The class can't soundproof enough to overcome the music, but could be moved for $4,000 . According to Coase, a socially optimal solution can be achieved if
a. the local government purchases the building
b. the building is torn down
c. property rights to be noisy are granted to the nightclub
d. property rights to a quiet environment are granted to the meditation class
e. both the nightclub and the meditation class relocate
D
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A market with two firms can be an oligopoly if: a. one of the firms eventually wins a patent on the product sold in the market. b. the government makes them sell their output at the equilibrium price
c. both the firms spend a significant amount of money on product development. d. one of the firms is taken over by the other.
The second largest source of revenue for the federal government is the
A. import tax. B. payroll tax. C. export tax. D. federal property tax.
Mike is maximizing utility by working 10 hours a week and studying 10 hours a week. Mike has only 20 hours to devote to either working or studying. If Mike realizes that another hour of studying will improve his grade on an exam, thus raising the utility of another hour of study, Mike will:
A. work fewer hours, shifting his labor supply curve to the left. B. study less to raise the marginal utility of studying even more. C. work fewer hours, moving him down along his labor supply curve. D. substitute work for studying, raising his total utility.
"The price of compact fluorescent light bulbs fell because of improvements in production technology. As a result, the demand for incandescent light bulbs decreased. This caused the price of incandescent light bulbs to fall; as the price of incandescent
light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement. A) The statement is false. A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease. B) The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluorescent light bulbs fell. C) The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits. D) The statement is false because it confuses the law of demand with the law of supply.