Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airline feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel. 625 MSC 385 325 MC 265 225 MB 100 120 Quantity of air travel Rgure 16.4 Refer to Figure 16.4. Suppose the government assigns property rights to the airlines. then the airlines and the residents engage in negotiations. Which of the following are true? (Select all that apply) O a. The airlines will compensate the residents to increase flights O b. The quantity of air travel is unchanged Oc. The airlines are made worse off O d. Residents will compensate the airlines to decrease flights O e. Quantity of air travel decreases by 20 units Of. The residents are made better off Og. Price of air travel increases by $60 Oh Quantity of air travel will be 120 units None of the oth Dollars, cost, benefit

Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airline feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel. 625 MSC 385 325 MC 265 225 MB 100 120 Quantity of air travel Rgure 16.4 Refer to Figure 16.4. Suppose the government assigns property rights to the airlines. then the airlines and the residents engage in negotiations. Which of the following are true? (Select all that apply) O a. The airlines will compensate the residents to increase flights O b. The quantity of air travel is unchanged Oc. The airlines are made worse off O d. Residents will compensate the airlines to decrease flights O e. Quantity of air travel decreases by 20 units Of. The residents are made better off Og. Price of air travel increases by $60 Oh Quantity of air travel will be 120 units None of the oth Dollars, cost, benefit

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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