Aluminum Aces dumps wastewater into a creek they have owned for decades. The new neighbor, Ms. Franklin, has tried to grow bamboo along the creek where it enters her property, but the wastewater kills about $1,000 worth of her bamboo each year. She offers Aluminum Aces $600 per year to add a new filter, which costs $400, to their system so wastewater will no longer kill her bamboo. What is one way this case exemplifies the Coase theorem?
a. One party gains at the other’s expense.
b. Property rights are questionable.
c. A negative externality is internalized.
d. Transaction costs are high.
c. A negative externality is internalized.
You might also like to view...
Given an equal amount of users, if the firm can only set one price, how should the firm price the no-name brand wok?
a. Price low and sell to both the users b. Price high and sell only to the professional chefs c. Price low and sell only to the home users d. All of the above
Rich countries (measured by GDP per capita) tend to have __________ infant mortality rates, __________ life expectancies at birth, and __________ adult literacy rates than poor countries
a. higher; higher; higher b. lower; higher; higher c. lower; lower; higher d. lower; lower; lower e. lower; higher; lower
In an open economy, the government deficit is 600 and saving exceeds investment by 500, so in equilibrium the trade deficit (IM? X) must be
A. 100 B. 200 C. 300 D. 700
Refer to the information provided in Table 3.1 below to answer the question(s) that follow. Table 3.1Price per PizzaQuantity Demanded (Pizzas per Month)Quantity Supplied (Pizzas per Month)$31,200 600 61,000 700 9 800 80012 600 90015 4001,000Refer to Table 3.1. If the price per pizza is greater than $15, there would most likely be a(n)
A. excess supply of more than 600 units. B. excess demand of less than 400 units. C. quantity demanded of more than 400 units. D. quantity supplied of less than 1,000 units.