Refer to the information provided in Figure 16.4 below to answer the question(s) that follow.
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. Figure 16.4
-Refer to Figure 16.4. If the government assigns property rights to ________ and no negotiations occur between the parties, the resulting level of air travel is 120 units.
A) the residents of Playa Del Rey
B) both the airlines and the residents of Playa Del Rey in a 50-50 split
C) the airlines
D) indeterminate from the given information.

Question

Refer to the information provided in Figure 16.4 below to answer the question(s) that follow.
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.  Figure 16.4
-Refer to Figure 16.4. If the government assigns property rights to ________ and no negotiations occur between the parties, the resulting level of air travel is 120 units.
A) the residents of Playa Del Rey 
B) both the airlines and the residents of Playa Del Rey in a 50-50 split 
C) the airlines 
D) indeterminate from the given information.

Quizplus · Accepted Answer

When the government assigns property rights to the airlines, they have the right to determine the level of air travel. Without negotiations, the airlines would choose the level of air travel that maximizes their benefit, which is indicated as 120 units in the scenario provided.

Refer to the Information Provided in Figure 16