The profit-maximizing firm in Exhibit 6 creates water and air pollution as a consequence of producing its output of beef cattle. If pollution costs are borne by third parties, the f rm will maximize economic profit by choosing to a. voluntarily incur costs to reduce its pollution. b. produce at output rate Q3. c. produce at output rate Q2. d. produce at output rate Q4.
Q279; To maximize social welfare, the fi rm in Exhibit 6 should produce at output rate a. Q1. b. Q2. c. Q3. d. Q4.
As shown in Exhibit 7, if Orville has the property right to fly over Wilbur’s house, but Wilbur is allowed to negotiate with Orville on the number of flights, what will be the number of flights? a. 2 b. 3 c. 4 d. 5
