Chad's maple tree hangs over Amy's fence and drops leaves into her yard each autumn.The benefit to Chad of lower utility bills due to the tree's shade in the summer is $300.The cost to Amy of having her lawn cleaned and reseeded is $350.Based on the Coase theorem,
A)Chad should pay Amy $400 so that he may keep the tree.
B)Chad should pay Amy $350 to have her lawn repaired and cleaned.
C)Amy should pay Chad $325 to cut down the tree.
D)Amy should build a fence.

Question

Quizplus · Accepted Answer

The Answer of Chad's maple tree hangs over Amy's fence and drops leaves into her yard each autumn.The benefit to Chad of lower utility bills due to the tree's shade in the summer is $300.The cost to Amy of having her lawn cleaned and reseeded is $350.Based on the Coase theorem,
A)Chad should pay Amy $400 so that he may keep the tree.
B)Chad should pay Amy $350 to have her lawn repaired and cleaned.
C)Amy should pay Chad $325 to cut down the tree.
D)Amy should build a fence.

Chad's Maple Tree Hangs Over Amy's Fence and Drops Leaves