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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Although firms earn zero profits in the long run, why is the outcome from monopolistic competition considered to be inefficient?
A) Price exceeds marginal cost. B) Quantity is lower than the perfectly competitive outcome. C) Goods are not identical. D) A and B are correct. E) B and C are correct.
Financial capital is
A) the collection of stock and bond exchanges around the country. B) funds used to purchase capital goods. C) the foreign exchange market. D) assets of financial institutions.