Sally's Cat Causes Mike to Sneeze

question 246

Multiple Choice

Sally's cat causes Mike to sneeze.Sally values her cat's companionship at $300 per year.The cost to Mike of tissues and her allergy medication is $350 per year.Based on the Coase theorem,

• A) Sally should pay Mike $400 so that she may keep her cat.
• B) Sally should pay Mike $350 for tissues and allergy medication.
• C) Mike should pay Sally $325 to give away her cat.
• D) Mike should move.

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