Consider two children,Janet and Joey,sharing the same room.Janet loves to play loud music while Joey does not like loud music.Suppose Janet is willing to pay Joey $2 to be allowed to play loud music,and Joey is willing to pay Janet $3 to keep the room quiet.
(A)What would be the socially optimal outcome? Why is it optimal?
(B)How might this outcome be achieved by an agreement between the two children? What theorem does this illustrate?

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The Answer of Consider two children,Janet and Joey,sharing the same room.Janet loves to play loud music while Joey does not like loud music.Suppose Janet is willing to pay Joey $2 to be allowed to play loud music,and Joey is willing to pay Janet $3 to keep the room quiet.
(A)What would be the socially optimal outcome? Why is it optimal?
(B)How might this outcome be achieved by an agreement between the two children? What theorem does this illustrate?

Consider Two Children,Janet and Joey,sharing the Same Room