​Sophia Sits Behind Gabriel on an Airplane

question 46

True/False

​Sophia sits behind Gabriel on an airplane. Gabriel owns the right to recline his seat and values this right at $10. Sophia values a non-reclined seat in front of her at $20. Assuming no transaction costs, an efficient solution would be for Sophia to pay Gabriel $15 to not recline his seat.
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Definitions:

Real Output

The total value of all goods and services produced in an economy, adjusted for price changes or inflation.

Relative-price Variability

The fluctuation in prices of goods and services relative to each other over time, often influenced by various economic factors.

Misallocation

The inefficient distribution or use of resources, often leading to suboptimal economic outcomes.

Nominal Gain

The increase in the monetary value of an asset or investment without adjusting for inflation, representing a simple difference in price.