Suppose your neighbor likes to repair motorcycles in his front yard during evenings and on weekends, and he earns $400 per week from this work. However, the sight of piles of greasy motorcycle parts and the additional noise and traffic caused by his customers reduces your value of living in this neighborhood by $300 per week. If your neighbor has a right to operate this business, what is the efficient outcome?

Question

Quizplus · Accepted Answer

The efficient outcome is for your neighbor to continue operating the business because the benefit ($400) exceeds the cost ($300) to you.

Suppose Your Neighbor Likes to Repair Motorcycles in His Front