Consider Two Neighbors Who Each Run a Small Business

question 106

Multiple Choice

Consider two neighbors who each run a small business. Juan grows and sells vegetables. Amber grows and sells flowers. Currently, Juan uses a herbicide on his vegetables, because he can grow more crops with the use of herbicide. Specifically, he earns $1,500 more during the years when he uses herbicide. Amber's flower farm is harmed by Juan's use of herbicide because it drifts to her farm and kills $3,000 worth of flowers each year. Which would be an efficient solution to this problem?

• A) The government bans the use of herbicide.
• B) Amber sells her flower business.
• C) Amber pays Juan $1,500 not to use a herbicide.
• D) There is no need for an intervention, as the current situation is efficient.

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