Question

assume that your roommate is very messy. According to campus policy, you have a right to live in an uncluttered apartment. Suppose she gets an $80 benefit from being messy but imposes a $60 cost on you. The Coase theorem would suggest that an efficient solution would be for your roommate to

Answer 1

her to pay you at least $60 but less than $80 to live with the clutter

Step-by-step explanation:

The Coase theorem states that when transaction cost is low, all parties involved will be able to bargain and reach an efficient outcome that benefits both parties. Based on this the efficient solution would be for her to pay you at least $60 but less than $80 to live with the clutter. Making it higher than the cost imposed on you but less than her benefit, thus ultimately benefiting both parties.