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 characteristics of this case that fits the Coase theorem?
a. Both parties are worse off than before.
b. Property rights are clearly defined.
c. A positive externality is internalized.
d. Transaction costs are indeterminable.
b. Property rights are clearly defined.
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Exhibit 36-1 Bond FaceValueof Bond Price ofthe Bond Annual CouponPayment A $1,000 $850 $25 B $1,000 $950 $41 C $1,000 $1,100 $52 D $1,000 $1,100 $32 E $1,000 $1,000 $50 Refer to Exhibit 36-1. The coupon rate for bond A is
A. 2.5 percent. B. 2.9 percent. C. 7.5 percent. D. 0.025 percent.
Most of our environmental problems exist because of
a. a lack of enforced and easily traded property rights. b. consumer ignorance. c. profit maximization on the part of business firms. d. the failure of political officials to regulate business activities.
Which of the following is likely to occur because of a decrease in marginal tax rates?
A. A decrease in aggregate supply because people cash in their investments. B. A decrease in aggregate demand because of an increased incentive to work. C. An increase in aggregate supply because of an increased incentive to work. D. A rightward shift in the Phillips curve.
In order for the money spent on children to be viewed as a good investment, economists would look at the ________ of the costs and compare that to the ________ of the benefits.
A. future value; present value B. present value; present value C. present value; future value D. future value; future value