Mike and Bob are both in the same enclosed hotel room.Mike assigns a $20 value to smoking his cigar.Bob values smoke-free air at $10.Which of the following scenarios is a successful example of the Coase theorem?
A)Bob offers Mike $15 not to smoke his cigar.Mike accepts and does not smoke.
B)Mike pays Bob $11 so that Mike can smoke his cigar.
C)Mike pays Bob $9 so that Mike can smoke his cigar.
D)Bob offers Mike $10 not to smoke his cigar.Mike accepts and does not smoke.

Question

Quizplus · Accepted Answer

The Answer of Mike and Bob are both in the same enclosed hotel room.Mike assigns a $20 value to smoking his cigar.Bob values smoke-free air at $10.Which of the following scenarios is a successful example of the Coase theorem?
A)Bob offers Mike $15 not to smoke his cigar.Mike accepts and does not smoke.
B)Mike pays Bob $11 so that Mike can smoke his cigar.
C)Mike pays Bob $9 so that Mike can smoke his cigar.
D)Bob offers Mike $10 not to smoke his cigar.Mike accepts and does not smoke.

Mike and Bob Are Both in the Same Enclosed Hotel