Suppose Oscar and Felix Share an Apartment

question 39

Multiple Choice

Suppose Oscar and Felix share an apartment. Oscar likes to leave his dirty dishes in the sink, and this really bothers Felix. When Oscar leaves his dirty dishes in the sink, Oscar's surplus from their living arrangement is $400 per month, and Felix's surplus is $300 per month. On the other hand, when Oscar does not leave his dirty dishes in the sink, Oscar's surplus from their living arrangement is $350 per month, and Felix's surplus is $325 per month. There are no rules or regulations that prevent Oscar from leaving his dishes in the sink. In this case, the socially optimal outcome can be achieved:

• A)if Felix gives Oscar $25 per month to stop leaving his dishes in the sink.
• B)if Felix gives Oscar $50 per month to stop leaving his dishes in the sink.
• C)if Felix gives Oscar more than $75 per month to stop leaving his dishes in the sink.
• D)without any intervention.

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Definitions:

Spurious Relationship

A false or misleading correlation between two variables that is not due to any direct relationship but might be due to a third variable or coincidence.

Causal Relationship

A connection between two variables where a change in one directly causes a change in the other.

Insurance Company

A financial institution that provides coverage by assuming the risks of its clients in exchange for premiums, offering protection against potential future losses.

Operationalization

The process of defining a research concept in practical, measurable terms.