A Large Farming Operation Which Uses a Potent Fertilizer Is

question 15

Multiple Choice

A large farming operation which uses a potent fertilizer is located up river from a trout farmer. If property rights of the river exist and transactions costs are low, the amount of pollution will be

• A) efficient only if the trout farmer owns the river.
• B) inefficient if the farming operation owns the river.
• C) efficient if either the farming operation or the trout farmer own the river.
• D) always inefficient.

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Definitions:

Economic Loss

The decrease in financial value or wealth, often resulting from business operations, market movements, or external economic events.

Perfectly Competitive

Characterized by a large number of sellers and buyers, none of whom can influence market prices significantly.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and loan payments.

MC Curve

The Marginal Cost (MC) Curve is a graphical representation showing how the cost to produce one additional unit of a good changes as production volume increases.