Describe a situation where at least one homeowner would be made worse off by this cleanup policy. 2. In the situation you described above, is there an alternative way to allocate costs that would avoid this problem? 3. What are the barriers, if any, to achieving this alternative?

Describe a situation where at least one homeowner would be made worse off by this cleanup policy. 2. In the situation you described above, is there an alternative way to allocate costs that would avoid this problem? 3. What are the barriers, if any, to achieving this alternative?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 13PAE

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Question

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Suppose a lake enjoyed by three homeowners is cleaned up to the socially efficient level of pollution by splitting the cost of cleanup equally among the three homeowners.

1. Describe a situation where at least one homeowner would be made worse off by this cleanup policy.

2. In the situation you described above, is there an alternative way to allocate costs that would avoid this problem?

3. What are the barriers, if any, to achieving this alternative?

(250 words or fewer.)

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