Kelly and Jennifer are roommates. Kelly loves listening to rock music and uses the radio in their
Question:
Kelly and Jennifer are roommates. Kelly loves listening to rock music and uses the radio in their common area to play it. Jennifer, on the other hand, prefers the peace and quiet around the common area. Suppose the landlord tries to resolve Kelly and Jennifer\\\'s situation by giving Kelly the right to play rock music in the common area. The value of listening to rock music to Kelly is $800 while the value of peace and quiet to Jennifer is $900.
1) What is the socially efficient outcome?
a. Kelly keeps playing rock music in the common area and Jennifer tolerates it.
b. Kelly pays Jennifer to play rock music in the common area.
c. Jennifer pays Kelly to stop playing rock music in the common area and enjoys the peace and quiet.
d. Jennifer gets to have peace and quiet and Kelly does not play rock music in the common area.
2) Based on your answer, what best describes the negotiation between Kelly and Jennifer?
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones