Nick owns a dog whose barking annoys his neighbor Jane. Suppose that the benefit
ID: 1140300 • Letter: N
Question
Nick owns a dog whose barking annoys his neighbor Jane. Suppose that the benefit of owning the dog is worth $500 to Nick and that Jane bears a cost of $700 from the barking. Assume that the city has no ordinance against barking dogs. A possible private solution that would benefit both parties is for:
Nick to pay Jane $650 for her inconvenience.
Jane to pay Nick $450 to get rid of the dog.
Jane to pay Nick $650 to get rid of the dog.
There is no private solution that would improve this situation for both parties.
a.Nick to pay Jane $650 for her inconvenience.
b.Jane to pay Nick $450 to get rid of the dog.
c.Jane to pay Nick $650 to get rid of the dog.
d.There is no private solution that would improve this situation for both parties.
Explanation / Answer
Ans:
Option C
Jane to pay Nick $650 to get rid of the dog.
A possible private solution that would benefit both parties is for Jane to pay Nick $650 to get rid of the dog.The above private solution would improve this situation for both parties as it is acceptable for both parties.