Glen is considering whether to paint his house and if so,what colour to choose.He settles on three options: leave it "as is",paint it brown,or paint it purple.Glen's neighbours are able to easily see his house.The following table shows the monetary values of utility for Glen and his neighbours under the three possibilities.
-Refer to the information above.Given a goal of maximizing total economic surplus,a Coase theorem solution would result in
A) no change in the colour of Glen's house.
B) Glen painting his house purple and paying his neighbours $10.
C) Glen's neighbours paying him $20.
D) Glen painting his house brown.
E) Glen painting the front of his house brown and the back purple.

Question

Glen is considering whether to paint his house and if so,what colour to choose.He settles on three options: leave it "as is",paint it brown,or paint it purple.Glen's neighbours are able to easily see his house.The following table shows the monetary values of utility for Glen and his neighbours under the three possibilities. 
-Refer to the information above.Given a goal of maximizing total economic surplus,a Coase theorem solution would result in
A) no change in the colour of Glen's house. 
B) Glen painting his house purple and paying his neighbours $10. 
C) Glen's neighbours paying him $20. 
D) Glen painting his house brown. 
E) Glen painting the front of his house brown and the back purple.

Quizplus · Accepted Answer

Glen painting his house purple and paying his neighbours $10 would result in the highest total economic surplus. This is because the benefit to Glen of painting his house purple ($30) is greater than the cost to his neighbours ($10).

Glen Is Considering Whether to Paint His House and If