(Consider This) Darcy and Rachel live down the hall from each other in the same dorm.Darcy likes to play her music loudly down the hall,and Rachel finds the music annoying.A Coase theorem solution for this problem would be for:

A) Darcy and Rachel to negotiate a mutually agreeable level of volume and/or selection of music.
B) the director of housing to impose a fine on Darcy whenever she plays her music too loud.
C) the dorm government to set a payment schedule by which Rachel would compensate Darcy for making her play her music at a lower volume.
D) the college to ban the playing of music in dorms.

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VINCY NITHYA S 16IT024 · Accepted Answer

Final Answer : A, Explanation :  The Coase theorem states that as long as property rights are well-defined and transaction costs are low, parties will negotiate and find the most efficient solution to a problem. In this case, Darcy and Rachel can negotiate a mutually agreeable level of volume to reduce annoyance to Rachel without depriving Darcy of her right to play music. This solution does not require any outside entities to intervene, and both parties should benefit from the negotiations.

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