Suppose the installation of sound absorbing materials in the walls of an auto body shop would cost $4,000, and would generate $25,000 in increased property values for an adjacent neighbor. Completely reducing all noise would require extensive retrofitting, costing $100,000, and would generate $30,000 increase in property values for the adjacent neighbor. Thus there are net social benefits to
installing the sound-absorbing materials. Which of the following would be consistent with the Coase Theorem?
a. If the area is zoned industrial and the shop has the right to emit noise, the efficient solution would be realized if the two parties negotiated and the neighbor bought sound-absorbing materials for the shop.
b. If the area is zoned industrial and the shop has the right to emit noise, the efficient solution would be realized when the neighbor appealed to the EPA for regulations requiring zero noise emissions and thus complete retrofitting of the shop.
c. If the area is zoned residential, and the neighbor has the right to a relatively quiet environment, the efficient solution would be realized by requiring the shop owner and the building owner to share the cost of reducing noise emissions to zero.
d. If the area is zoned residential, and the neighbor has the right to a relatively quiet environment, the efficient solution would be realized by requiring the neighbor to completely retrofit the building to reduce noise emissions to zero.
a
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
Refer to Figure 1A.1. Assume that the graph in this figure represents the demand and supply curves for walnuts. An advance in production technology which makes harvesting walnuts less time consuming would be represented by a shift from
A) Demand 1 to Demand 2. B) Demand 2 to Demand 1. C) Supply 1 to Supply 2. D) Supply 2 to Supply 1.
Based on the research findings of David Galenson, Robert Heavner and others, what type of person would you expect to negotiate an indenture contract of the longest duration?
a. a 13 year-old illiterate male who went to New York b. a 22 year-old female weaver who went to Massachusetts c. a 20 year-old male unskilled worker who went to the West Indies d. a 21 year-old male blacksmith who went to the Pennsylvania
Which of the following describes a tying contract?
A. The seller of one product requires the buyer to purchase some other product(s). B. One firm buys the stock of a competing firm. C. The directors of one company serve on the board of directors of another company in the same industry. D. An agreement between a manufacturer and a retailer based on the condition that the retailer is not to carry any rival products of the manufacturer.