Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 4, Problem 6QP
To determine
The rent ceiling.
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- 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. Assume the tenants have the right to be free of loud music enforced through a property rule. If transaction costs were $90, split between the bar owner and the tenants, how many bands would play? What would social welfare be? A) Two bands would play and social welfare would be 75. B) Two bands would play and social welfare would be ‐25. C) No bands would play and social welfare would be zero. D) No bands would play and social welfare would be ‐90. E) One band would play and social welfare would be 25.arrow_forwardThere 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. If the tenants have the right to be free of loud music enforced through a property rule, how many bands will play in Rock‐n‐Roll Bar on a Saturday night? A. Zero B. One C. Two D. Three E. It depends on transaction costsarrow_forwardThere 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. Assume the bar owner has the right to hire as many bands as she likes. If transaction costs were $90, split between the bar owner and the tenants, how many bands would play? What would social welfare be? A. Three bands would play and social welfare would be ‐100. B. Two bands would play and social welfare would be 75. C. Two bands would play and social welfare would be ‐15. D. No bands would play and social welfare would be 0. E. Three bands would play and social welfare would be ‐190arrow_forward
- 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. Assume the tenants have the right to be free of loud music enforced through a property rule. If transaction costs were $90, split between the bar owner and the tenants, how many bands would play? What would social welfare be? A) Two bands would play and social welfare would be 100 B) Two bands would play and social welfare would be 75 C) No bands would play and social welfare would be -15 D) No bands would play and social welfare would be 0 E) One band would play and social welfare would be -190arrow_forwardThere 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 theoryarrow_forwardPlease see the question belowarrow_forward
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