Thelma owns a cat which wakes up her roommate Louise at 6am every morning. Thelma enjoys cat ownership, but Louise bears a cost of Thelma's ownership of the cat. Assuming that Louise has the legal right to sleep as long as she likes, which action is necessary? if Thelma's benefit exceeds Louise's cost, government intervention is necessary if Louise's cost exceeds Thelma 's benefit, Thelma will pay Louise to keep
Thelma owns a cat which wakes up her roommate Louise at 6am every morning. Thelma enjoys cat ownership, but Louise bears a cost of Thelma's ownership of the cat. Assuming that Louise has the legal right to sleep as long as she likes, which action is necessary? if Thelma's benefit exceeds Louise's cost, government intervention is necessary if Louise's cost exceeds Thelma 's benefit, Thelma will pay Louise to keep
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 6QP
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Thelma owns a cat which wakes up her roommate Louise at 6am every morning. Thelma enjoys cat ownership, but Louise bears a cost of Thelma's ownership of the cat. Assuming that Louise has the legal right to sleep as long as she likes, which action is necessary?
if Thelma's benefit exceeds Louise's cost, government intervention is necessary
if Louise's cost exceeds Thelma 's benefit, Thelma will pay Louise to keep her cat
Thelma will pay Louise to be able to keep the cat if her benefit exceeds Louise's cost
if Louise has the legal right to sleep, she only has to pay Thelma when her cost is below Thelma's benefit
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