A large farming operation which uses a potent fertilizer is located up river from a trout farmer. If property rights of the river exist and transactions costs are low, the amount of pollution will be ________
A) efficient only if the trout farmer owns the river
B) inefficient if the farming operation owns the river
C) efficient if either the farming operation or the trout farmer own the river
D) always inefficient
C
You might also like to view...
The Soup Nut serves his signature minestrone soup in two different bowl sizes, large and small. What strategy should he use to extract the most surplus possible out of customers who come in two types, regular and big eaters, when he cannot distinguish between the two types by observation? a. Distort the size of the small bowl downward to make it less attractive to the big eaters, allowing him to
raise the price of the large bowl. b. Distort the size of the large bowl downward to make it attractive to both big and regular eaters. c. Distort the size of the small bowl upward to make it harder for regular eaters to separate themselves from big eaters. d. Distort the size of the large bowl upward to make big eaters less likely to consume the small bowl.
Suppose a new pollution tax of $0.01 per kilowatt-hour of electricity is imposed on coal-fired power producers by the federal government. Which of the following correctly describes how this tax will affect the market for electricity served by these power plants?
a. The supply of electricity will increase. b. The supply of electricity will decrease. c. Demand for electricity will increase. d. Demand for electricity will decrease.