Asked by Sarah Elizabeth on May 11, 2024
Verified
Anne has just purchased a new house in a lovely neighborhood. Her neighbors are friendly and even brought her house-warming gifts. Anne, however, has a problem. Her neighbors have cats, and Anne hates cats. Even though the city has a law requiring all outdoor pets to be on a leash, her neighbors ignore it, and the cats roam all over Anne's property. How would an economist describe this situation? Is there anything Anne can do?
Outdoor Pets
Domestic animals such as dogs and cats that are suitable for living outside in a safe environment.
Leash Law
Regulations requiring pet owners to keep their pets on a leash in public areas to prevent accidents and ensure safety.
- Critically review the influence of external costs and benefits on the efficiency of markets.
- Examine the role of government in addressing market failures and providing public goods.
Verified Answer
HB
Heather BootheMay 13, 2024
Final Answer :
An economist would say negative externalities are present if the neighbors' cats are imposing an external cost on Anne. She could report the lawbreakers to the police, and have Animal Control round up the cats, but this wouldn't be very neighborly. Her best bet might be to get together with her neighbors and negotiate a compromise. Since they are the only two parties to this problem, they have a good chance of working out a mutually acceptable agreement.
Learning Objectives
- Critically review the influence of external costs and benefits on the efficiency of markets.
- Examine the role of government in addressing market failures and providing public goods.
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