You love Christmas and elaborately decorate your home and yard. It is such a spectacle that hundreds of people drive by your house each day to enjoy the display. The noise and traffic disturb your neighbors who sue you, and you are required to take down your display permanently. This is an example of
A. an injunction.
B. the Coase theorem.
C. the free-rider problem.
D. a liability rule.
Answer: A
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Suppose the equilibrium level of income exceeds the full employment level of income and there is high inflation. Hence, the government decides to implement a fiscal policy that will act to reduce national output and prices. This can be accomplished by:
a. increasing government spending such that aggregate expenditures are increased. b. raising taxes and government spending by the same amount such that aggregate supply is decreased and aggregate demand is increased. c. decreasing government spending such that aggregate demand is reduced. d. lowering average tax rates such that aggregate supply is increased. e. increasing transfer payments such that aggregate expenditures decline.
In the long run, a higher saving rate
a. cannot increase the capital stock. b. means that people must consume less in the future. c. increases the level of productivity. d. None of the above is correct.
Exhibit 7-9 Cost schedule for firm X OutputQuantity Total FixedCost Total VariableCost 0 $100 $ 0 1 100 50 2 100 84 3 100 108 4 100 127 5 100 150 As shown in Exhibit 7-9, the total cost of producing 4 units is:
A. zero. B. $227. C. $250. D. $100.
A monopoly produces widgets at a marginal cost of $20 per unit and zero fixed costs. It faces an inverse demand function given by P = 100 ? 4Q. What are the profits of the monopoly in equilibrium?
A. $800 B. $600 C. $200 D. $400