There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed in the attached table.
Does the number of bands playing on a Saturday night depend on how many tenants there are in the building? (Assume that the costs described in the table above refer to the total costs to tenants, not the cost to each tenant.)
A. Maybe, due to possible transaction costs
B. No, since they see the owner often and it is easy to negotiate
C. Yes because it makes an agreement harder to enforce
D. No, due to the free‐rider theory
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