Refer to the information provided in Figure 16.4 below to answer the question(s) that follow.Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airlines feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel.
Figure 16.4Refer to Figure 16.4. Suppose the government assigns property rights to the residents of Playa Del
Rey, then the airlines and the residents engage in negotiations. The resulting efficient level of air travel is
A. 0 units.
B. 100 units.
C. 120 units.
D. indeterminate from the given information.
Answer: B
You might also like to view...
The government of Richland has set a minimum wage for factory workers. This will lead to an ________ if above the current market wage
A) increase in total surplus B) increase in the number of workers supplied C) excess demand for workers D) increase in income inequality
Suppose that during a period of inflation, the Fed reduced its holdings of U.S. securities from $600 billion to $580 billion. This indicates that the Fed was
a. seeking to reduce the money supply to decrease inflation. b. trying to force Congress to decrease taxes. c. expanding the money supply and stimulating employment. d. expanding the money supply, even though the existing inflation suggested a restrictive policy would be more appropriate.
European countries tend to rely more on consumption taxes than does the United States
a. True b. False Indicate whether the statement is true or false
If expectations are adaptive, how will the economy adjust to a new long-run equilibrium in response to contractionary monetary policy? Support your answer with a graph of the Phillips curve
What will be an ideal response?