Figure 7.1: Angus and Dudley are neighbors. Angus loves to play the bagpipes and earns a living recording his bagpipe music for use as background music in the movies. If Angus does not earn a living playing bagpipes, his only other talent is mopping floors. Dudley is a linguist whose clients are actors wishing to perfect accents for upcoming roles. When Angus plays his bagpipes, Dudley and his clients have trouble listening to each other, and this has severely affected Dudley's business. Presently, there is no city ordinance against playing loud music. The payoff matrix showing the daily payoffs to each player is shown above.
-Refer to Figure 7.1. Suppose that instead of $350, Angus earns only $250 by playing the bagpipes, but all other earnings remain the same. The Coase theorem predicts that Angus ________ play the bagpipes with no city ordinance banning loud music, and Angus ________ play the bagpipes if the city passes an ordinance banning loud music.
A) will; will
B) will; will not
C) will not; will
D) will not; will not

Question

Figure 7.1:  Angus and Dudley are neighbors. Angus loves to play the bagpipes and earns a living recording his bagpipe music for use as background music in the movies. If Angus does not earn a living playing bagpipes, his only other talent is mopping floors. Dudley is a linguist whose clients are actors wishing to perfect accents for upcoming roles. When Angus plays his bagpipes, Dudley and his clients have trouble listening to each other, and this has severely affected Dudley's business. Presently, there is no city ordinance against playing loud music. The payoff matrix showing the daily payoffs to each player is shown above.
-Refer to Figure 7.1. Suppose that instead of $350, Angus earns only $250 by playing the bagpipes, but all other earnings remain the same. The Coase theorem predicts that Angus ________ play the bagpipes with no city ordinance banning loud music, and Angus ________ play the bagpipes if the city passes an ordinance banning loud music.
A) will; will 
B) will; will not 
C) will not; will 
D) will not; will not

Quizplus · Accepted Answer

The Answer of Figure 7.1:  Angus and Dudley are neighbors. Angus loves to play the bagpipes and earns a living recording his bagpipe music for use as background music in the movies. If Angus does not earn a living playing bagpipes, his only other talent is mopping floors. Dudley is a linguist whose clients are actors wishing to perfect accents for upcoming roles. When Angus plays his bagpipes, Dudley and his clients have trouble listening to each other, and this has severely affected Dudley's business. Presently, there is no city ordinance against playing loud music. The payoff matrix showing the daily payoffs to each player is shown above.
-Refer to Figure 7.1. Suppose that instead of $350, Angus earns only $250 by playing the bagpipes, but all other earnings remain the same. The Coase theorem predicts that Angus ________ play the bagpipes with no city ordinance banning loud music, and Angus ________ play the bagpipes if the city passes an ordinance banning loud music.
A) will; will 
B) will; will not 
C) will not; will 
D) will not; will not

Figure 71: Angus and Dudley Are Neighbors