Beth can earn $7,500 by renting out her house. However, her neighbor keeps a pet dog that chases away whoever comes looking for the house. Because her neighbor has a right to keep his pet untied, Beth is unable to find a tenant
What is the efficient outcome in this case if her neighbor values keeping his pet free for $1,500?
An efficient outcome in this case can be achieved if Beth strikes a private deal with her neighbor convincing him to keep his pet indoors. Because Beth can earn $7,500 by renting out her house and her neighbor values keeping her pet outdoors at $1,500, total well-being can be increased if Beth pays her neighbor an amount between $1,500 and $7,500 to keep his pet indoors.
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Which of the following did not occur during the Industrial Revolution?
a. Production became more reliant on highly specialized equipment. b. A more efficient division of labor was promoted. c. Workers bore much of the costs of production. d. The transaction costs of contracting with individual resource owners were reduced. e. Technological development increased the productivity of most workers.
IBM undertook a massive restructuring program to decentralize into six smaller decision-making groups in order to reduce economies of scale
a. True b. False
In determining the exchange rate between the Canadian dollar and British pound, if Canadian income increases, then
a. the demand for pounds will increase, leading to depreciation of the Canadian dollar, assuming exchange rates are allowed to float b. the demand for pounds will increase, leading to depreciation of the Canadian dollar, assuming exchange rates are fixed c. the demand for pounds will increase, leading to appreciation of the Canadian dollar, assuming exchange rates are allowed to float d. the demand for pounds will increase, leading to appreciation of the Canadian dollar, assuming exchange rates are fixed e. the supply of pounds will shift to the left, causing appreciation of the Canadian dollar, assuming exchange rates are fixed
An increase in real interest rates in the United States
a. discourages both U.S. and foreign residents from buying U.S. assets. b. encourages both U.S. and foreign residents to buy U.S. assets. c. encourages U.S. residents to buy U.S. assets, but discourages foreign residents from buying U.S. assets. d. encourages foreign residents to buy U.S. assets, but discourages U.S. residents from buying U.S. assets.