Anne has just purchased a new house in a lovely neighborhood. Her neighbors are friendly and even brought her house-warming gifts. Anne, however, has a problem. Her neighbors have cats, and Anne hates cats. Even though the city has a law requiring all
outdoor pets to be on a leash, her neighbors ignore it, and the cats roam all over Anne's property. How would an economist describe this situation? Is there anything Anne can do?
An economist would say negative externalities are present if the neighbors' cats are imposing an external cost on Anne. She could report the lawbreakers to the police, and have Animal Control round up the cats, but this wouldn't be very neighborly. Her best bet might be to get together with her neighbors and negotiate a compromise. Since they are the only two parties to this problem, they have a good chance of working out a mutually acceptable agreement.
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Use Figure 13.1 above to help with the following question. Why is it true that at every level of output except the first unit, the monopolist's marginal revenue (MR) is below price
What will be an ideal response?
Refer to Figure 24-2. Ceteris paribus, an increase in productivity would be represented by a movement from
A) SRAS1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A.
On the surface, Usury laws are designed to protect consumers from exorbitant interest rates.
Answer the following statement true (T) or false (F)
Marginal cost is calculated for a particular increase in output by
A) multiplying the total cost by the change in output. B) multiplying the change in total cost by the change in output. C) dividing the total cost by the change in output. D) dividing the change in total cost by the change in output.