Question

Some of the mangos from your neighbor's mango tree drop into your yard. You don't like mangos and the fallen mangos make it harder to mow your lawn. Your neighbor values the tree at $300, and your cost of dealing with it is $500. If your neighbor has the legal right to keep the tree, what would be an efficient outcome according to the Coase theorem?

A. Your neighbor pays you $400 to not have the tree cut down.
B. Your neighbor pays you $200 to not have the tree cut down.
C. You pay yur neighbor $400 to cut the tree down.
D. You call city officials to have the tree cut down.

Answer 1

A.

Step-by-step explanation:

Your neighbor pays you $400 to not have the tree cut down