So, this time, Groucho and Harpo work together in the same office. Groucho smokes; Harpo hates smoke. Groucho has the right to smoke, and he…

So, this time, Groucho and Harpo work together in the same office. Groucho smokes; Harpo hates smoke. Groucho has the right to smoke, and he currently smokes 12 cigars per day. He faces marginal costs of reducing smoking (withdrawal pains) equal to $x, where x is the number of cigars reduced. In other words, the cost of giving up the first cigar is $1, the second, $2, and so forth. Harpo receives marginal benefits (reduced discomfort and risk of cancer) equal to $(12-x) from Groucho reducing the number of cigars smoked.

1. Draw a diagram showing the marginal costs and marginal benefits of pollution reduction; put the number of cigars reduced on the horizontal axis. Is it efficient for Groucho to smoke 12 cigars per day? Why or why not? Use this diagram to determine the efficient number of cigars for Groucho to smoke.

2. Assume that Groucho has the right to smoke in the office, but that Harpo can pay Groucho to smoke less. Can Groucho and Harpo come up with a deal that makes both individuals better off? How many cigars will Groucho smoke under this Coasean bargain? How much money will Groucho be able to charge Harpo for this reduction in smoking? Is this outcome efficient? Is it fair?

3. Now assume their boss reduces Harpo’s wages. Harpo cannot afford to pay Groucho more than $30 a day to reduce the amount of smoking in their office. How many cigars will Groucho smoke now, given this increased inequality? How much money will Groucho charge Harpo for this reduction in smoking? Is the new outcome efficient? Is it fair

Show more







Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10