Suppose that you rent a house next to a factory. The factory legally emits a chemical into the air that smells like feet. You now have to spend $300 more per month on air fresheners because the firm pollutes the air. You could move to another house far enough away from the factory, but the rent for that house is $200 more than you now pay. The efficient solution to this problem is that
A. the factory owner should reimburse you $100, the difference between your expenses and the higher rent on the new house.
B. you should move to the new house because the additional rent on that new house is less than the additional expenses you incur from living next to the factory.
C. the firm should be able to continue to pollute because only one person is being harmed by the factory's pollution.
D. the factory owner should compensate you $300 so that you can pay for the additional expenses you incur.
Answer: B
You might also like to view...
The minimum value of the Herfindahl-Hirschman Index is
A) -100. B) -1. C) approximately 0. D) 1.
If a monopoly firm is continually earning above-normal profits, then
a. the entry of new firms will reduce profits to normal in the long run b. the profits may remain above-normal in the long run despite the entry of new firms c. market forces other than the entry of new firms will reduce profits to normal in the long run d. falling market demand due to the firm's high prices will reduce profits to normal in the long run e. barriers to entry may enable the profits to remain above-normal in the long run
Dumping
a. is the sale of a good abroad at a cheaper price than what the good is sold for in the producer's domestic market. b. generally hurts consumers of the nation receiving the "dumped" goods. c. is generally encouraged by domestic producers of the product being dumped since they are the primary beneficiaries of the dumping. d. is the sale of a good that is illegal in the producing country to another country.
Which of the following would be added to the GDP to determine the GNP?
a. the profits a Canadian company earns in Colorado b. the profits a U.S. company earns in Vancouver c. the profits a Canadian company earns in Quebec d. the profits a U.S. company earns in Florida