Assume That Your Housemate Is Very Messy

question 181

Multiple Choice

Assume that your housemate is very messy.Suppose he gets a $200 benefit from being messy but imposes a $100 cost on you.The Coase theorem would suggest that an efficient solution would be for you to:

• A)pay your housemate at least $100 but no more than $200 to clean up after himself
• B)pay your housemate at least $201 to clean up after himself
• C)continue to live with your messy housemate until you are able to make other living arrangements elsewhere
• D)charge your housemate at least $100 to have you clean up after him

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Definitions:

Price Floor

A government-imposed minimum price charged for a commodity, below which it cannot legally be sold, typically intended to protect producers.

Retailers

Businesses that sell goods directly to consumers.

Price Floor

A government-imposed minimum price set above the equilibrium price, intended to ensure fair conditions for producers.

Minimum Price

A price floor set by the government or a body, below which the product cannot be sold, aimed at protecting producers or farmers.