A Meditation Class Meets on the Second Floor of a Building.The

question 89

Multiple Choice

A meditation class meets on the second floor of a building.The first floor is a nightclub.The loud music from the club disturbs the classes.The club could be soundproofed for a cost of $5,000 or moved at a cost of $8,000.The classroom cannot be soundproofed enough to overcome the music,but the class can be moved at a cost of $4,000.According to the Coase theorem,_____

• A)the club should be soundproofed so both businesses can stay open.
• B)the club should be soundproofed because it is the one generating the externality.
• C)the club should move rather than be soundproofed because eliminating an externality is better than compensating for it.
• D)the class should move because it can eliminate the externality at a lower cost than can the nightclub.
• E)whichever business has been there longer has a property right and the other should adjust.

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Definitions:

Eccrine Sweat Gland

A type of sweat gland found throughout the body that regulates body temperature by releasing a watery sweat onto the surface of the skin.

Sebaceous Gland

A small oil-producing gland present in the skin of mammals, which secretes sebum into the hair follicles to lubricate the skin and hair.

Hair Follicle

A dynamic organ located in the dermal layer of the skin, from which hair grows, and is a site for sebaceous glands and nerve endings.

Sebaceous Gland

A gland in the skin that produces sebum, an oily substance that helps to lubricate and protect the skin.