Your Neighbor Has a Tree That Blocks Your View of a Distant

question 11

Multiple Choice

Your neighbor has a tree that blocks your view of a distant hill. Your neighbor values the tree at $100. You value the tree's removal at $150. Tree removal costs $60. In this case, property rights are clear. Your neighbor owns the airspace extending above his house for some distance. Transaction costs in this case:

• A) would allow for a private solution to the external cost.
• B) would prohibit a private solution to the external cost.
• C) would be equal to zero.
• D) are unknown.

---

Definitions:

External

Pertaining to or situated on the outside of something; relating to the outer environment or surroundings.

Unstable

Lacking in stability, predictability, or consistency, often leading to unpredicted changes or outcomes.

Specific Factors

Elements or conditions that are distinct and contribute to a particular outcome or situation.

Prototype

The object that has the greatest number of attributes characteristic of the concept and that is therefore the most typical member of that concept.