1. Pareto improvements Aa AaE At Bandia University, there are no rules about pla
ID: 1118014 • Letter: 1
Question
1. Pareto improvements Aa AaE At Bandia University, there are no rules about playing loud music in the dorms, and there are no quiet hours. On the night before finals, Kim wants to play loud music in her dorm room all night long. However, Kim would be willing to stop playing music if someone would pay her $30. Charles, who lives next door to Kim, plans to study all night, and (since the library is closed and he can't go anywhere else) he'd be willing to pay up to $70 for peace and quiet. Strangely, no one else in the hall cares about Kim's music one way or another Which of the following would be a Pareto improvement? Check all that apply. A new ruling by the dorm manager: The manager collects $80 from Charles and pays it to Kim, while forbidding Kim to play her music A new ruling by the dorm manager: The manager collects $40 from Charles and pays it to Kim, while forbidding Kim to play her music A new ruling by the dorm manager: The manager forbids Kim to play her music, without any compensation.Explanation / Answer
The Correct Answer is:-
A new ruling by the dorm manager: the manager collects $40 from Charles and pays it to Kim while forbidding Kim to play her music
Reason:- Pareto improvement is a situation where one person is an advantage without causing any worse off to any other party. In the example, when $40 is taken from Charles and paid to Kim for not playing the music, both the parties are better off as Charles has to pay lesser money as he was willing to pay for quite study while Kim can also get more money than what was she looking for not to play the music.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.