1.Factory does not insta scrubber. -armer uses south field croc Damage (S= 120 Farmer cost ($=0 Factory Cost($=0 Social cost =120 2. -actor does not install scrubber Farmer rents west field Crop Damage (S = 50 Farmer cost ($=20 Factory Cost$=C SocIal cost =/( 3.Factory installs scrubber, Farmer uses south field Crop Damage ($) = 35 Farmer cost ($=0 Factorv Cost ($=40 Social cos 4.Factory installs scrubber, Farmer rents west field Crop Damage ($=0 Farmer cost (S\=20 Factorv Cost $=40 Social cost = 60 1. Now the farmer has a right to pollution abatement, creating a lega duty for the factory to install the scrubber no additional crop damages will be paid if the factory fulfills the duty to install the scrubber). What is the factory's willingness to pay to continue polluting without the scrubber? Why? 2. Now the farmer has a right to pollution abatement, creating a legal duty for the factory to install the scrubber (no additional crop damages will be paid if the factory fulfills the duty to install the scrubber). What is the farmer's willingness to acceptto allow the factory to not install the scrubber? Why? 3. Under the property rule where the farmer has a right to pollution abatement, consider the factory's willingness to pay and the farmer's willingness to accept in Questions 9 and 10. Again, suppose that there are no transaction costs for negotiation. 1. Will the parties negotiate and reach an agreement to allow the factory to not install the scrubber? Explain why or why not. 2. If they do not reach an agreement, which action each party will take and is the outcome is efficient? 4. Which type of dispute resolution consistently reached the socially efficient outcome in this situation, the liability rules or the property rules with bargaining? What general principle from economics does this illustrate? 5. In the scenarios we used to analyze this problem, we made several assumptions to reach our conclusions. A. Which assumptions are not likely to be met in the real world and why? B. Why is this private negotiation and liability analysis useful? Please answer each part in 2-4 complete sentences using the economic and legal concepts from class material
1.Factory does not insta scrubber. -armer uses south field croc Damage (S= 120 Farmer cost ($=0 Factory Cost($=0 Social cost =120 2. -actor does not install scrubber Farmer rents west field Crop Damage (S = 50 Farmer cost ($=20 Factory Cost$=C SocIal cost =/( 3.Factory installs scrubber, Farmer uses south field Crop Damage ($) = 35 Farmer cost ($=0 Factorv Cost ($=40 Social cos 4.Factory installs scrubber, Farmer rents west field Crop Damage ($=0 Farmer cost (S\=20 Factorv Cost $=40 Social cost = 60 1. Now the farmer has a right to pollution abatement, creating a lega duty for the factory to install the scrubber no additional crop damages will be paid if the factory fulfills the duty to install the scrubber). What is the factory's willingness to pay to continue polluting without the scrubber? Why? 2. Now the farmer has a right to pollution abatement, creating a legal duty for the factory to install the scrubber (no additional crop damages will be paid if the factory fulfills the duty to install the scrubber). What is the farmer's willingness to acceptto allow the factory to not install the scrubber? Why? 3. Under the property rule where the farmer has a right to pollution abatement, consider the factory's willingness to pay and the farmer's willingness to accept in Questions 9 and 10. Again, suppose that there are no transaction costs for negotiation. 1. Will the parties negotiate and reach an agreement to allow the factory to not install the scrubber? Explain why or why not. 2. If they do not reach an agreement, which action each party will take and is the outcome is efficient? 4. Which type of dispute resolution consistently reached the socially efficient outcome in this situation, the liability rules or the property rules with bargaining? What general principle from economics does this illustrate? 5. In the scenarios we used to analyze this problem, we made several assumptions to reach our conclusions. A. Which assumptions are not likely to be met in the real world and why? B. Why is this private negotiation and liability analysis useful? Please answer each part in 2-4 complete sentences using the economic and legal concepts from class material
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
1.Factory does not insta scrubber. -armer uses south field croc
Damage (S= 120
Farmer cost ($=0 Factory Cost ($=0 Social cost =120
2. -actor does not install scrubber
Farmer rents west field Crop Damage (S =
50 Farmer cost ($=20 Factory Cost$=C
SocIal cost =/(
3.Factory installs scrubber, Farmer uses
south field Crop Damage ($) = 35 Farmer
cost ($=0 Factorv Cost ($=40 Social cos
4.Factory installs scrubber, Farmer rents west field Crop Damage ($=0
Farmer cost
(S\=20 Factorv Cost $=40 Social cost = 60
1. Now the farmer has a right to pollution abatement, creating a lega duty for the factory to install the scrubber no additional crop damages will be paid if the factory fulfills the duty to install the scrubber).
What is the factory's willingness to pay to continue polluting without the scrubber? Why?
2. Now the farmer has a right to pollution abatement, creating a legal duty for the factory to install the scrubber (no additional crop damages will be paid if the factory fulfills the duty to install the scrubber).
What is the farmer's willingness to acceptto allow the factory to not install the scrubber? Why?
3. Under the property rule where the farmer has a right to pollution abatement, consider the factory's willingness to pay and the farmer's willingness to accept in Questions 9 and 10. Again, suppose that there are no transaction costs for negotiation.
1. Will the parties negotiate and reach an agreement to allow the factory to not install the scrubber?
Explain why or why not.
2. If they do not reach an agreement, which action each party will take and is the outcome is efficient?
4. Which type of dispute resolution consistently reached the socially efficient outcome in this situation, the liability rules or the property rules with bargaining? What general principle from economics does this illustrate?
5. In the scenarios we used to analyze this problem, we made several assumptions to reach our conclusions.
A. Which assumptions are not likely to be met in the real world and why?
B. Why is this private negotiation and liability analysis useful?
Please answer each part in 2-4 complete sentences using the economic and legal concepts from class material
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education