Roberto and Thomas live in a university hall of residence Roberto values playing loud music at a value of €100. Thomas values Pease and quiet at a value of €150. Which of the following statements is true ?
Correct answer: A. It is efficient for Roberto to stop playing loud music regardless of who has the property right to the level of sound
- A. It is efficient for Roberto to stop playing loud music regardless of who has the property right to the level of sound
- B. it is efficient for Roberto to continue to play loud music
- C. It is efficient for Roberto to stop playing loud music only if Thomas has the property right to peace and quiet
- D. It is efficient for Roberto to stop playing loud music only if Roberto has the property right to play loud music
Explanation
Stopping the music creates €150 of benefit for Thomas while costing Roberto only €100, so quiet is the efficient outcome regardless of the initial property right. Property rights affect who pays or receives compensation, not the efficient result when bargaining is possible.
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