Suppose there are ten people playing cards in a room. One of them wants to smoke a cigar, nine of them dislike the smell of cigar smoke. The smoker values the privilege of smoking at $5, and each of the other nine people of the room would be willing to pay fifty cents for clean air in the room. The rules governing use of the room state that smoking is not allowed unless everyone agrees to allow smoking. Is it socially optimal for the cigar smoker to smoke?
A)No, because the majority of people in the room dislike the smell of cigar smoke.
B)No, because the value to the cigar smoker of smoking is less than the total value to the other people in the room of clean air.
C)Yes, because the value to the cigar smoker of smoking is greater than the total value to the other people in the room of clean air.
D)Yes, because the value to the cigar smoker of smoking is greater than 50 cents.

Question

Quizplus · Accepted Answer

In this case, it is socially optimal for the cigar smoker to smoke since the value to him of smoking ($5)is greater than the total value to the other occupants of clean air ($0.50 × 9 = $4.50).

Suppose There Are Ten People Playing Cards in a Room