7. Beverly owns a rabbit and receives a $600 benefit from owning it. Sometimes Beverly's rabbit makes its way onto the lawn of her neighbor, Charles, and eats the vegetables in Charles' garden. This intrusion by the rabbit costs Charles $400. a. Can both individuals become better off if Charles pays Beverly some amount of money to get rid of the rabbit? Explain. b. Now assume that the government changes the regulations on owning a domestic animal and if anyone can force neighbors to give up their animals. (this is the case for some animals for example rooster). Can both individuals become better off if Beverly pays Charles some amount of money to keep the rabbit?
7. Beverly owns a rabbit and receives a $600 benefit from owning it. Sometimes Beverly's rabbit makes its way onto the lawn of her neighbor, Charles, and eats the vegetables in Charles' garden. This intrusion by the rabbit costs Charles $400. a. Can both individuals become better off if Charles pays Beverly some amount of money to get rid of the rabbit? Explain. b. Now assume that the government changes the regulations on owning a domestic animal and if anyone can force neighbors to give up their animals. (this is the case for some animals for example rooster). Can both individuals become better off if Beverly pays Charles some amount of money to keep the rabbit?
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter10: Externalities
Section: Chapter Questions
Problem 1PA
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