Author Question: Suppose that your roommate is very untidy. Suppose she/he gets a 100 benefit from being messy but ... (Read 85 times)

karen · **on:** Jun 30, 2018

Suppose that your roommate is very untidy. Suppose she/he gets a 100 benefit from being messy but imposes a 200 cost on you. (Assume that there are no regulations against untidiness in your living quarters.) The Coase Theorem would suggest that an efficient solution can be reached where:
a. you pay your roommate at least 100 but no more than 200 to clean up after her/himself
b. you pay your roommate at least 201 to clean up after her/himself.
c. you continue to live with your untidy roommate until you are able to make other living arrangements elsewhere.
d. your roommate pays you at least 100 to have you clean up after her/him.

Question 2

Proponents of strategic trade policy contend that:
a. government should tax domestic firms to generate greater revenues.
b. government should encourage imports to prevent monopoly in the domestic market.
c. government should provide subsidies to domestic firms with decreasing costs.
d. government should discourage domestic firms with decreasing costs from continuing production.
e. government should tax domestic import competing firms.