Suppose That Bill Wants to Dine at a Fancy Restaurant

question 166

Multiple Choice

Suppose that Bill wants to dine at a fancy restaurant, but the only available table is in the smoking section. Bill dislikes the smell of cigarette smoke. He notices that only one person, Peter, is smoking in the smoking section. Bill values the absence of smoke at $15. Peter values the ability to smoke in the restaurant at $10. In order for Bill to pay Peter not to smoke, he will need to tip the waiter $10 to facilitate the transaction. Which of the following represents an efficient solution?

• A)Peter continues to smoke because the cost to Bill to pay him not to smoke is between $20 and $25, which exceeds the benefit to him of no smoking ($15).
• B)Bill offers Peter between $10 and $15 not to smoke, and he pays the waiter $10. Peter accepts, and both parties are better off.
• C)Bill offers Peter between $10 and $15 not to smoke, and he pays the waiter $10. Peter declines because he has a right to smoke in the smoking section.
• D)Bill offers Peter $5 not to smoke, and he pays the waiter $10. Peter accepts, and both parties are better off.

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Definitions:

Human Dilemma

A situation or problem inherent to the human condition that presents challenges or obstacles that are difficult to navigate or resolve.

May's Concept

Refers to Rollo May's theories in existential psychology focusing on human choice, anxiety, and the search for meaning.

Fromm's Concept

Pertains to the theories of Erich Fromm, a psychoanalyst and social psychologist who explored the relationship between society and the individual's psychological processes.

Neurotic Anxiety

A form of anxiety that arises from an unconscious fear that one's impulses or suppressed emotions will take control, leading to unwanted behaviors or consequences.