A Local Laundry Advertises That the Clothes It Washes Smell

question 24

Multiple Choice

A local laundry advertises that the clothes it washes smell "sunshine fresh" because it line dries everything outside.Then a steel factory moves in next door and emits black smoke which stains the clothes drying at the laundry.According to the Coase theorem,granting the

• A)steel factory the right to pollute would be efficient, but granting the laundry the right to clean air would be equitable.
• B)laundry the right to clean air would be efficient, but granting the steel factory the right to pollute would be equitable.
• C)steel factory the right to pollute has the same effect on equity as granting the laundry the right to clean air.
• D)steel factory the right to pollute has the same effect on efficiency as granting the laundry the right to clean air.

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Definitions:

Tax Burden

The overall impact of taxes on an individual or entity's finances, often expressed as a percentage of income or total cost.

Deadweight Loss

The loss of gains from trade to buyers and sellers that occurs when a tax is imposed. The deadweight loss imposes a burden on both buyers and sellers over and above the actual payment of the tax.

Keynesian View

An economic theory asserting that government intervention can stabilize the economy through monetary and fiscal policies.

Private Investment

Private Investment encompasses the expenditures on capital assets by private businesses or individuals, excluding government spending.