Alexander lives in an apartment building and gets a $250 benefit from playing his stereo. Mary, who lives next door to Alexander and often loses sleep due to the loud music coming from Alexander's stereo, bears a $350 cost from the noise. Mary would like to offer Alexander some money to turn down the volume on his stereo. If Mary had to hire a lawyer to draw up the contract, what is the maximum amount she could pay to the lawyer to ensure that both Alexander and Mary would benefit from the agreement?
A)an amount less than $100
B)an amount between $100 and $250
C)an amount between $250 and $350
D)Any amount could result in both parties benefiting from the agreement.

Question

Quizplus · Accepted Answer

The maximum amount Mary could pay to the lawyer is $100. This is because the benefit to Alexander from playing his stereo is $250, and the cost to Mary from the noise is $350. Therefore, the maximum amount that Mary could pay to Alexander to turn down the volume on his stereo is $250 - $100 = $150.

Alexander Lives in an Apartment Building and Gets a $250