Curly and Moe are considering living alone or being roommates and splitting the rent for the next twelve months.If they live alone,they each rent a one bedroom,one bath apartment for $500 per month,while if they are roommates,they can split a two bedroom,one bath apartment for $800 per month.The one difficulty they have is that Moe snores very loudly.Curly estimates the cost of poor sleep due to Moe's snoring at $150 per month.Moe could obtain a snore-eliminating device for $50 per month.
Refer to the information given above.The least costly solution to the externality present in this situation is for:
A)Curly to endure Moe's snoring.
B)both to live alone.
C)Moe to eliminate his snoring.
D)Moe to pay Curly for his discomfort.

Question

Quizplus · Accepted Answer

It would cost Moe $50 per month to stop the snoring.It would cost Curly $150 a month to put up with the snoring.Renting a separate apartment would cost Curly $100 more than splitting an $800 per month rent bill.

Curly and Moe Are Considering Living Alone or Being Roommates