Assume that your roommate is very messy. According to campus policy, you have a right to live in an uncluttered apartment. Suppose she gets an $80 benefit from being messy but imposes a $60 cost on you. The Coase theorem would suggest that an efficient solution would be for your roommate to
a. stop her messy habits or else move out.
b. pay you at least $60 but less than $80 to live with the clutter.
c. continue to be messy and force you to move out.
d. demand payment of at least $60 but no more than $80 to clean up after herself.
b
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A bank that expects interest rates to fall will
A) want the duration of its assets to be greater than the duration of its liabilities—a positive duration gap. B) want the duration of its assets to be less than the duration of its liabilities—a positive duration gap. C) want the duration of its assets to be greater than the duration of its liabilities—a negative duration gap. D) want the duration of its assets to be less than the duration of its liabilities—a negative duration gap.
A perfectly competitive firm is selling 300 units of output at $4 each. At this output level, total fixed cost is $100 and total variable cost is $500. The firm
A) is maximizing its profit. B) is earning a profit, but not necessarily the maximum profit. C) is experiencing an economic loss. D) should shut down.