A Large Farming Operation Which Uses a Potent Fertiliser Is

question 29

Multiple Choice

A large farming operation which uses a potent fertiliser 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) inefficient if the farming operation owns the river.
• B) efficient if either the farming operation or the trout farmer owns the river.
• C) always inefficient.
• D) efficient only if the trout farmer owns the river.

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflective of its sensitivity to price changes.

Price Elasticity

An indicator of consumer sensitivity to price fluctuations, represented by the extent to which demand for a product varies in response to its price adjustments.

Pay-As-You-Go Principle

A financing method where expenditures are not financed by borrowing but from current revenues.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, banking supervision, and financial services.