Question

Question 21 [1 point) Derek owns a dog whose barking annoys Derek's neighbor Jane. Suppose that the benefit of owning the dog is worth $200 to Derek and that Jane bears a cost of $400 from the barking. Assuming Derek has the legal right to keep the dog, a possible private solution to this problem is that Jane pays Derek $300 to give the dog to his parents who live on an isolated farm Jane pays Derek $500 to give the dog to his parents who live on an isolated farm There is no private transaction that would improve this situation. Derek pays Jane $350 for her inconvenience. Question 22 [1 point) EPA stands for Environmental Protection Agency. True False Question 23 (1 point) Please refer to the figure. Assume a competitive market. Now the government sets a price ceiling at $24. The deadweight loss is valued at $12 $36

Answer 1

21. Dog is worth $200 to Derek but bears a cost of $400 barking to Jane.

Assuming Derek has the legal right to keep the dog, then a possible solution to this problem is that Jane pays Derek between $200 and $400 to use the method which don't affect him negatively. So, Jane pays Derek $300 to give the dog to his parents who live on an isolated farm . Hence,option(A) is correct.

22. TRUE EPA stands for Environmental Protection Agency.