Karen's cat causes Danny to sneeze. Karen values her cat's companionship at $300 per year. The cost to Danny of tissues and her allergy medication is $350 per year. Based on the Coase theorem,
a. Karen should pay Danny $400 so that she may keep her cat.
b. Karen should pay Danny $350 for tissues and allergy medication.
c. Danny should pay Karen $325 to give away her cat.
d. Danny should move.
c
You might also like to view...
Individuals economize and respond predictably to
a. positive incentives, but not negative incentives. b. negative incentives, but not positive incentives. c. both positive and negative incentives. d. neither positive or negative incentives.
Explain how the gold standard operated
What will be an ideal response?
Economic rent is a payment for a factor of production that elicits an increase in the quantity supplied.
Answer the following statement true (T) or false (F)
Suppose that a large rogue wave destroys the (thankfully unoccupied) fleet of swordfish fishing boats docked in the Gloucester, Massachusetts harbor. What happens to the earnings of fishermen and women in Gloucester?
a. The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall. b. The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to fall. c. The reduction in the supply of fishing boats increases the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise. d. The reduction in the supply of fishing boats reduces the marginal productivities of Gloucester fishermen and women, which causes the equilibrium wage to rise.