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ECO - Los Angeles International Airport (LAX) is located next to Playa Del Rey

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Question;Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airlines feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel.Refer to Figure 16.5. Suppose the government assigns property rights to the airlines, then the airlines and the residents engage in negotiations. The resulting efficient level of air travel is ________.A: 0 unitsB: 100 unitsC: 120 unitsD: Indeterminate from the given information.

 

Paper#57817 | Written in 18-Jul-2015

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