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your college roommate has the right to practice her tuba during the day. you, however, find that studying during the day is most conducive to good grades, and her tuba-playing makes it difficult for you to concentrate. you make a deal with your roommate: you will clean the dorm room once a week if she will practice her tuba at other times or elsewhere. this is an example of emission permits. a corrective tax. a corrective subsidy. the coase theorem.

User Vikas
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2 Answers

5 votes

Final answer:

This situation is an example of the Coase Theorem, where you and your roommate were able to negotiate a solution without involving the government or any external authority.

Step-by-step explanation:

This situation is an example of a Coase Theorem.

The Coase Theorem states that if there are clearly defined property rights and low transaction costs, people can negotiate and find the most efficient solution to a problem without government intervention or regulation.

In this case, you and your roommate were able to negotiate a solution without involving the government or any external authority. You made a deal where you agreed to clean the dorm room once a week in exchange for your roommate practicing her tuba at other times or elsewhere. This shows the application of the Coase Theorem, as you found a solution that benefits both parties without the need for intervention.

User Sean Reilly
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9.1k points
3 votes

Final answer:

The situation described is an example of marketable permits, as you and your roommate made a trade where you clean the dorm room once a week in exchange for her practising her tuba at other times or elsewhere to preserve your ability to study effectively.

Step-by-step explanation:

This situation can be related to the concept of marketable permits. Marketable permits are permits that allow a firm or individual to emit a certain amount of pollution. In this case, you and your college roommate made a deal where you would clean the dorm room once a week in exchange for your roommate practising her tuba at other times or elsewhere, thus resolving the conflict that was affecting your ability to concentrate on studying.

This resembles a marketable permit system as you and your roommate essentially created a trade where you are providing a service (cleaning the dorm room) in exchange for your roommate adjusting her tuba practice times. In this scenario, the marketable permits are the cleaning service you offer in exchange for your roommate's cooperation. Therefore, the correct answer to your question is that the situation described is an example of marketable permits.

User Klind
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