Question :
41.Assumethatyourroommateisverymessy.Accordingtocampuspolicy,youhavearighttoliveinanunclutteredapartment.Supposeshegetsan$80benefitfrombeingmessybutimposesa$60costonyou.TheCoasetheoremwouldsuggestthatanefficientsolutio : 1261406
41.Assumethatyourroommateisverymessy.Accordingtocampuspolicy,youhavearighttoliveinanunclutteredapartment.Supposeshegetsan$80benefitfrombeingmessybutimposesa$60costonyou.TheCoasetheoremwouldsuggestthatanefficientsolutionwouldbeforyourroommateto
a.stophermessyhabitsorelsemoveout.
b.payyouatleast$60butlessthan$80tolivewiththeclutter.
c.continuetobemessyandforceyoutomoveout.
d.demandpaymentofatleast$60butnomorethan$80tocleanupafterherself.
42.SupposethatCompanyA’srailroadcarspassthroughFarmerB’scornfields.Therailroadcausesanexternalitytothefarmerbecausetherailroadcarsemitsparksthatcause$1,500indamagetothefarmer’scrops.Thereisaspecialsoy-basedgreasethattherailroadcouldpurchasethatwouldeliminatethedamagingsparks.Thegreasecosts$1,200.Supposethatthefarmerhastherighttocompensationforanydamagethathiscropssuffer.Assumethattherearenotransactioncosts.Whichofthefollowingcharacterizestheefficientoutcome?
a.Therailroadwillcontinuetooperatebutwillpaythefarmer$1,500indamages.
b.Therailroadwillpurchasethegreasefor$1,200andpaythefarmernothingbecausenocropdamagewilloccur.
c.Thefarmerwillincur$1,500indamagestohiscrops.
d.Thefarmerwillpaytherailroad$1,200topurchasethegreasesothatnocropdamagewilloccur.
43.SupposethatCompanyA’srailroadcarspassthroughFarmerB’scornfields.Therailroadcausesanexternalitytothefarmerbecausetherailroadcarsemitsparksthatcause$1,500indamagetothefarmer’scrops.Thereisaspecialsoy-basedgreasethattherailroadcouldpurchasethatwouldeliminatethedamagingsparks.Thegreasecosts$1,200.Supposethattherailroadisnotliableforanydamagecausedtothecrops.Assumethattherearenotransactioncosts.Whichofthefollowingcharacterizestheefficientoutcome?
a.Therailroadwillcontinuetooperatebutwillpaythefarmer$1,500indamages.
b.Therailroadwillpurchasethegreasefor$1,200andpaythefarmernothingbecausenocropdamagewilloccur.
c.Thefarmerwillincur$1,500indamagestohiscrops.
d.Thefarmerwillpaytherailroad$1,200topurchasethegreasesothatnocropdamagewilloccur.
44.SupposethatCharleswantstodineatafancyrestaurant,buttheonlyavailabletableisinthesmokingsection.Charlesdislikesthesmellofcigarettesmoke.Henoticesthatonlyoneperson,Sam,issmokinginthesmokingsection.Charlesvaluestheabsenceofsmokeat$40.Samvaluestheabilitytosmokeintherestaurantat$15.Whichofthefollowingrepresentsanefficientsolutionintheabsenceoftransactioncosts?
a.Samcontinuestosmokebecausehehasarighttosmokeinthesmokingsection.
b.CharlesoffersSambetween$15and$40nottosmoke.Samaccepts,andbothpartiesarebetteroff.
c.CharlesoffersSambetween$15and$40nottosmoke.Samdeclinesbecausehehasarighttosmokeinthesmokingsection.
d.Onlyagovernmentpolicybanningsmokinginrestaurantswillsolvethisproblem.
45.SupposethatBillwantstodineatafancyrestaurant,buttheonlyavailabletableisinthesmokingsection.Billdislikesthesmellofcigarettesmoke.Henoticesthatonlyoneperson,Peter,issmokinginthesmokingsection.Billvaluestheabsenceofsmokeat$15.Petervaluestheabilitytosmokeintherestaurantat$10.InorderforBilltopayPeternottosmoke,hewillneedtotipthewaiter$10tofacilitatethetransaction.Whichofthefollowingrepresentsanefficientsolution?
a.PetercontinuestosmokebecausethecosttoBilltopayhimnottosmokeisbetween$20and$25,whichexceedsthebenefittohimofnosmoking($15).
b.BilloffersPeterbetween$10and$15nottosmoke,andhepaysthewaiter$10.Peteraccepts,andbothpartiesarebetteroff.
c.BilloffersPeterbetween$10and$15nottosmoke,andhepaysthewaiter$10.Peterdeclinesbecausehehasarighttosmokeinthesmokingsection.
d.BilloffersPeter$5nottosmoke,andhepaysthewaiter$10.Peteraccepts,andbothpartiesarebetteroff.
46.Cameronlivesinanapartmentbuildingandgetsa$700benefitfromplayinghisstereo.Renee,wholivesnextdoortoCameronandoftenlosessleepduetothemusiccomingfromCameron’sstereo,bearsa$1,000costfromthenoise.AtwhichofthefollowingoffersfromReneecouldbothReneeandCameronbenefitfromthesilencingofCameron’sstereo?
a.$250
b.$550
c.$750
d.$1,020
47.Alexanderlivesinanapartmentbuildingandgetsa$250benefitfromplayinghisstereo.Mary,wholivesnextdoortoAlexanderandoftenlosessleepduetotheloudmusiccomingfromAlexander’sstereo,bearsa$350costfromthenoise.MarywouldliketoofferAlexandersomemoneytoturndownthevolumeonhisstereo.IfMaryhadtohirealawyertodrawupthecontract,whatisthemaximumamountshecouldpaytothelawyertoensurethatbothAlexanderandMarywouldbenefitfromtheagreement?
a.anamountlessthan$100
b.anamountbetween$100and$250
c.anamountbetween$250and$350
d.Anyamountcouldresultinbothpartiesbenefitingfromtheagreement.
48.Tylivesinanapartmentbuildingandgetsabenefitfromplayinghisstereo.Olivia, who lives next doorto Ty andoftenlosessleepduetotheloudmusiccomingfromTy’sstereo,bearsacostfromthenoise.Olivia is threatening tocallthepolicetoforceTytoturndownhisstereo.UnderwhichofthefollowingconditionswouldTybeabletoofferOliviasomeamountofmoneytokeepherfromcallingthepoliceandtoallowhimtocontinuetoplayhisstereoloudly?
a.ThecostofthenoisetoOliviamustexceedthebenefitofthemusictoTy.
b.ThebenefitofthemusictoTymustexceedthecostofthenoisetoOlivia.
c.TheCoaseTheoremguaranteesthatOliviaandTywillalwaysbeabletocometoanagreementthatkeepsOliviafromcallingthepoliceregardlessoftheindividualbenefitsandcosts.
d.ThecostofthenoisetoOliviamustexceedthebenefitofthemusictoTybyanamountgreaterthanthetransactioncostsassociatedwiththeagreement.
49.Thurmanisawriterwhoworksfromhishome.ThurmanlivesnextdoortoPhil,thedrummerforalocalband.Philneedsalotofpracticetoearn$250,whichishisshareoftheband’sprofit.ThurmangetsdistractedbyPhil’sdrummingbutheneedstogethiswritingdonetoearn$500forhiscurrentarticle.Which of the following isanefficientsolution?
a.PhiloffersThurman$499toallowPhiltocontinuedrumming.Thurmanacceptsandbotharebetteroff.
b.PhiloffersThurman$249toallowPhiltocontinuedrumming.Thurmanacceptsandbotharebetteroff.
c.ThurmanoffersPhil$251tostoppracticinghisdrumming.Philagreesandbotharebetteroff.
d.ThurmanoffersPhil$501tostoppracticinghisdrumming.Philagreesandbotharebetteroff.
50.Gretchenisawriterwhoworksfromherhome.GretchenlivesnextdoortoRandall,thetrumpetplayerforalocalband.Randallneedslotsofpracticetoearnhisshareoftheband’sprofit,whichwillamountto$350.GretchengetsdistractedbyRandall’strumpetplayingbutsheneedstogetherwritingdonetoearn$570forhercurrentarticle.IfGretchenneedstohirealawyertohelpherreachanagreementwithRandall,thenwhatpriceisGretchenwillingtopaythelawyer?
a.lessthan$350
b.lessthan$450
c.lessthan$570
d.lessthan$920