Ty lives in an apartment building and gets a benefit from playing his stereo. Olivia, who lives next door to Ty and often loses sleep due to the loud music coming from Ty's stereo, bears a cost from the noise. Olivia is threatening to call the police to force Ty to turn down his stereo. Under which of the following conditions would Ty be able to offer Olivia some amount of money to keep her from
calling the police and to allow him to continue to play his stereo loudly?
a. The cost of the noise to Olivia must exceed the benefit of the music to Ty.
b. The benefit of the music to Ty must exceed the cost of the noise to Olivia.
c. The Coase Theorem guarantees that Olivia and Ty will always be able to come to an agreement that keeps Olivia from calling the police regardless of the individual benefits and costs.
d. The cost of the noise to Olivia must exceed the benefit of the music to Ty by an amount greater than the transaction costs associated with the agreement.
b
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Answer the following statement(s) true (T) or false (F)
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Assuming no kinks in indifference curves and assuming our usual assumptions about tastes hold, someone who currently neither saves nor borrows will begin to borrow when the interest rate falls.
Answer the following statement true (T) or false (F)
Why did India's economic growth rate lag far behind growth rates in South Korea, Japan, and Taiwan between 1960 and 1999?
A) Indian households saved too much and spent too little. B) Indian government officials opened the nation up to free international trade. C) India engaged in central economic planning. D) India has too small of a population to generate a highly specialized division of labor.
Given the equations for C, I, G, and NX below, what is the equilibrium level of GDP?
C = 1,000 + 0.8Y I = 1,500 G =1,250 NX = 100 A) $3,080 B) $3,850 C) $6,930 D) $19,250