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Microeconomics Midterm - Part 3 of 3!
SAMPLE
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7. Externalities / Private Solutions to Externalities: The Coase Theorem / Problem 21
Problem 21

In a Coase Theorem scenario, the owner values their dog at \$600, and the neighbor incurs a cost of \$700 due to the noise. If the owner has property rights, what is a possible efficient solution?