Suppose That Bill Wants to Dine at a Fancy Restaurant,but

question 141

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 $5.Which of the following represents an efficient solution in the absence of transaction costs?

• A) Peter continues to smoke because he has a right to smoke in the smoking section.
• B) Bill offers Peter between $5 and $15 not to smoke.Peter accepts,and both parties are better off.
• C) Bill offers Peter between $5 and $15 not to smoke.Peter declines because he has a right to smoke in the smoking section.
• D) Only a government policy banning smoking in restaurants will solve this problem.

---

Definitions:

Grouping Benefit

The advantages that individuals gain by forming or being part of a group, such as increased protection from predators or enhanced foraging efficiency.

Somatosensory Cortex

The Somatosensory Cortex is a region of the brain responsible for processing sensory information from across the body, such as touch, temperature, and pain.

Burrowing Mammals

Mammals that dig or live in burrows in the ground as a means of protection from predators, temperature control, and for nesting.

Sensitive Facial Features

Physical characteristics of the face that are highly responsive to changes in emotional states or environmental stimuli.