Near an ocean beach, a high-rise building is being constructed that will block t

Question

Near an ocean beach, a high-rise building is being constructed that will block the scenic view of the ocean by the residents of a low-rise building. The Coase theorem suggests that this type of dispute between the owners of high-rise and low-rise buildings:

a Can be resolved by the owners themselves through individual bargaining

b Has to be resolved by city government officials

c Can only be resolved by a zoning ordinance restricting high-rise buildings

d Should be resolved by a government fine for the builder of the high-rise

Explanation / Answer

A) The first thing that you have to learn about economics tests and textbooks is that no matter what the facts are the answer will always be free market or less government, no matter how tortured the logic. Once I realized this I have never scored less than an A in a class and barely have to study for tests except to get familiar with the terminology from the book and to brush up on the graphs.

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