Multiple Choice
Bob lives in a residential neighbourhood that takes pride on well-groomed lawns.Bob's neighbours find that the marginal benefit of someone else's well-groomed lawn is $10.Bob,however,receives the same net benefit from an unkempt lawn as a well-groomed lawn: zero (an unkempt lawn looks bad but costs nothing;a well groomed lawn looks nice but is costly) .
-Refer to the information above.The Coase theorem suggests that
A) the rest of the neighbourhood will have to live with Bob.
B) Bob's neighbours should pass a law requiring well groomed lawns.
C) Bob's neighbours could pay Bob to have a well groomed lawn and be better off.
D) Bob's neighbours could pay Bob to have a well groomed lawn and be no better off.
E) Bob has undervalued a well groomed lawn.
Correct Answer:

Verified
Correct Answer:
Verified
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