Suppose that two roommates share a bathroom. Jeff, your roommate, makes a mess with toothpaste in the sink. This bothers the other roommate, Justin. According to the Coase Theorem, one necessary condition to alleviate the externality of toothpaste in the sink is that
A. either Jeff or Justin own the house (and therefore the bathroom).
B. neither Jeff nor Justin own the house (and therefore do not own the bathroom).
C. Jeff has the right to leave the toothpaste and Justin cannot do anything else.
D. Justin has a right to a clean bathroom and Jeff has to clean up the toothpaste.
Answer: A
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