Asarta Inc. is polluting into a nearby fishing; doing so benefits them $40,000 a year. The fishermen are unhappy as their trout are dying off. Typically, the fishermen can catch trout and sell it to a local market where they can earn about $8,000 a year. Currently, the fishermen have the rights to use the stream as they see fit. Which of the following is an optimal solution according to the Coase Theorem?
A. Asarta Inc. could pay the fishermen $8,500 and keep polluting
B. There is no optimal solution given the current property rights
C. The fishermen could pay Asarta Inc. $4,000 to stop them from polluting
D. Asarta Inc. could pay the fishermen $7,000 and keep polluting
Answer: A
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A) perfect price discrimination. B) group price discrimination. C) quantity discrimination. D) second-degree price discrimination.
The 1910–1914 period was chosen as a benchmark period for determining parity prices because that was when
a. there was the greatest number of farms b. corn prices were the highest c. farmers believed that farm and nonfarm prices were such that farms goods tradedequal value for equal value with nonfarm goods d. the exchange standard was most biased in favor of farmers e. farm productivity was the lowest