1. A kebap shop and a fancy café are adjoin. Due to the kebap shop cause...

50.1K

Verified Solution

Question

Economics

1. A kebap shop and a fancy café are adjoin. Due to the kebapshop cause too much smoke and smell, the café loses costomers.

There are number of costomers and profit assoicated with themare given below. Profit of café decreses as the number of costomersof Kebep shop increases. Depending on these data, can Coase Theoremfind a solution for this externalities problem? Why?

Kebapshop                                                  The Café

Number of costomer     Profit                                Profit                  Total

0                                         0                                         4000                    4000

100                                     3000                                  2500                    5500

200                                     5000                                  1500                    6500

300                                     6000                                  1000                    7000

Answer & Explanation Solved by verified expert
4.0 Ratings (601 Votes)
According to the Coase theorem two private parties will be able to bargain with each other and find an efficient solution to an externality problem In this scenario the profit of cafe decreases as the number    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students