A Metal-Stamping Factory Moves Next to a Day Care Center

question 85

Multiple Choice

A metal-stamping factory moves next to a day care center.Noise from the factory makes it impossible for the kids to nap.It would cost the factory $5 million to move; it would cost $1 million for the day care center to move.Sound insulation for the factory costs $1 million; insulation for the day care center costs $200, 000.The court initially determines that the day care center has the property right and orders the factory to purchase insulation for the day care.But on appeal the factory is awarded the property right.How would the optimal solution to this problem change after the appeals court decision?

• A)The insulation would still be bought, but it would be bought by the day care center, a result consistent with the Coase theorem.
• B)Insulation for the factory would be bought instead of insulation for the day care center, a result consistent with the Coase theorem.
• C)Insulation for the day care center would still be bought, but it would be bought by the factory, a result consistent with the Coase theorem.
• D)Insulation for the factory would be bought instead of insulation for the day care center, a result inconsistent with the Coase theorem.
• E)The day care center would move instead of buying insulation, a result consistent with the Coase theorem.

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Definitions:

Psychoanalysis

A therapeutic approach founded by Sigmund Freud that aims to explore the unconscious mind to understand and treat psychological disorders, emphasizing early childhood experiences and the role of the unconscious.

Group Therapy

A form of psychotherapy where one or more therapists treat a small group of clients together, exploring shared issues and dynamics.

Operant Behavior

A method of learning that employs rewards and punishments for behavior, emphasizing the effects of external stimuli on behavior.

Respondent Behavior

Behavior that occurs as an automatic response to a certain stimulus.