6 Assume that your roommate, Linda, is very messy. Suppose she gets a $100 benef

Question

6 Assume that your roommate, Linda, is very messy. Suppose she gets a $100 benefit from being messy but imposes a $200 cost on you. What would the erd Coase theorem suggest would be an efficient solution for you tof Select one: ston O a. to pay your roommate 590 to clean up after herself b. to pay your roommate at least $100 but no more than $200 to clean up after herself O c. to pay your roommate at least $201 to clean up after herself Od. to charge your roommate at least $100 to have you clean up after her

Explanation / Answer

Coarse theorom states regarding the economic efficiency of an allocation that should be allocated without which there can be net loss on the whole. In the case, it was stated that the Linda gets benefit of $100 and it gets to impose $200 cost by her room mate. So option 1 says that you should offer compensation of $90 to clean up herself with which the net benefit will be $10. In the remaining options, Linda will not gain anything or she'll lose something net.

Therefore option (a) is the answer

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