Sophia sits behind Gabriel on an airplane. Gabriel owns the right to recline his seat and values this right at $10 . Sophia values a non-reclined seat in front of her at $40 . Assuming no transaction costs, which of the following represents an efficient solution?

a. Sophia offers Gabriel between $10 and $40 to not recline his seat. Gabriel accepts, and both parties are better off.
b. Sophia offers Gabriel between $0 and $10 to not recline his seat. Gabriel accepts, and Sophia is better off.
c. Sophia offers Gabriel between $10 and $40 to not recline his seat. Gabriel declines because he has the right to recline his seat.
d. Gabriel offers Sophia between $10 and $40 to recline his seat. Sophia accepts, and both parties are better off.


a

Economics

You might also like to view...

The ____ method assumes that the cash flows over the life of the project are reinvested at the ____

a. net present value; computed internal rate of return b. internal rate of return; firm's cost of capital c. net present value; firm's cost of capital d. net present value; risk-free rate of return e. none of the above

Economics

If the people of a country are expecting an increase in the rate of economic growth, they will increase their rate of saving

a. True b. False Indicate whether the statement is true or false

Economics

Sheena lost her job as a sales manager when she quit to move to Texas. She is currently submitting applications and doing job interviews. What type of unemployment is this?

a. structural b. cyclical c. she is not unemployed d. frictional

Economics

Consider two individuals, Ozzy and Sharon, who produce toy boats and yoyos. Ozzy's and Sharon's hourly productivity are as follows:?Yoyos /hourToy boats /hourOzzy124Sharon105Who has the absolute advantage or comparative advantage in the production of yoyos or boats?

What will be an ideal response?

Economics