A Meditation Class Meets on the Second Floor of a Building;

question 114

Multiple Choice

A meditation class meets on the second floor of a building; the first floor is a nightclub.The loud music from the club disturbs the classes.The club could be soundproofed for a cost of $5, 000 or move at a cost of $8, 000.The class can't soundproof enough to overcome the music, but could be moved for $4, 000.According to Coase,

• A)the club should be soundproofed so both businesses can stay open
• B)the club should be soundproofed because it is the one generating the externality
• C)the club should move rather than be soundproofed because eliminating an externality is better than compensating for it
• D)the class should move because it can eliminate the externality at a lower cost than can the nightclub
• E)whichever business has been there longer has the overriding property right; the other should adjust

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Definitions:

Object Permanence

The realization that objects still exist even when they are not visible, audible, or detectable by any other senses.

Accommodation

In cognitive psychology, the process by which existing mental schemas are modified or new schemas are created to absorb new information.

Theory of Mind

The ability to attribute mental states—beliefs, intents, desires, pretending, knowledge—to oneself and others and to understand that others have beliefs, desires, and intentions that are different from one's own.

Object Permanence

The understanding that objects continue to exist even when they cannot be observed (seen, heard, touched, smelled, or sensed in any way).