A metal stamping factory moves next to a day care center. Noise from the factory makes it impossible for the kids to nap. It would cost the factory $5 million to move and $1 million for the day care center to move. Sound insulation for the factory costs $1 million, while insulation for the day care center costs $200,000. The court determines that the day care center has the property right. Which of the following optimal solution is likely to be true given the scenario?

Question

A metal stamping factory moves next to a day care center. Noise from the factory makes it impossible for the kids to nap. It would cost the factory $5 million to move and $1 million for the day care center to move. Sound insulation for the factory costs $1 million, while insulation for the day care center costs $200,000. The court determines that the day care center has the property right. Which of the following optimal solution is likely to be true given the scenario?​

Quizplus · Accepted Answer

Since the day care center has the property right, the factory should bear the cost of mitigating the noise. The cheapest option for the factory is to pay for the day care center's insulation, which costs $200,000.

A Metal Stamping Factory Moves Next to a Day Care