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 occupants 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.
Refer to the information given above.The Coase Theorem would predict that if the property right to smoke belongs to the cigar smoker,then there ________ smoking in the room.If the property right to clean indoor air belongs to the room occupants,then there ________ smoking in the room.
A)will be;will be
B)will be;will not be
C)will not be;will not be
D)will not be;will be

Question

Quizplus · Accepted Answer

Regardless of the initial allocation of property rights,the smoker values smoking by more than the non-smokers value clean air.

Suppose There Are Ten People Playing Cards in a Room