A meditation class meets on the second floor of a building; the first floor is a nightclub. The loud music from the club disturbs the classes. The club could be soundproofed for a cost of $5,000 or move at a cost of $8,000 . The class can't soundproof enough to overcome the music, but could be moved for $4,000 . According to Coase,

a. the club should be soundproofed so both businesses can stay open
b. the club should be soundproofed because it is the one generating the externality
c. the club should move rather than be soundproofed because eliminating an externality is better than compensating for it
d. the class should move because it can eliminate the externality at a lower cost than can the nightclub
e. whichever business has been there longer has the overriding property right; the other should adjust


D

Economics

You might also like to view...

Insurance companies charge a lower premium to drivers who carry a higher deductible because

A) insurance companies are not profit maximizers. B) a driver's riskiness decreases as the driver's deductible increases. C) a high deductible signals a high risk. D) insurance companies prefer that drivers carry no deductible.

Economics

Competition in markets results in:

A.) Economic losses in the long run. B.) Guaranteed economic profit. C.) The optimal mix of goods and services being produced. D.) An undesirable allocation of resources.

Economics

A map is an example of a model because a map

A) realistically describes an area. B) is always as complex as space will permit. C) is two-dimensional. D) is a simplified representation of reality.

Economics

________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors

A) Absolute advantage B) Specialization C) Autarky D) Comparative advantage

Economics