Question

34. Bryce loves baseball. During the entire baseball season (every day from mid-March until the end of October), Byrce will watch at least one game in his apartment at full volume. Candace loves basketball. During the entire basketball season (every day from mid-October until mid-June), Candace will watch at least one game in her apartment at full volume. Bryce and Candace are neighbors in the same apartment building and the walls of the building are extremely thin. In fact, when the baseball and basketball seasons overlap, neither can hear the games they are watching and each tries to play their games as loud as possible. Part 1: (a) Describe the externalities that exist in this relationship. (b) Relying on an economic concept discussed in this unit, describe how Bryce and Candace could come to a solution (be sure to state the economic concept in your answer). Part 2: If Bryce's and Candace's landlord imposed a decibel limit and required all of her tenants to cease making noise after 5pm, how would the landlord's solution be described using an economic concept discussed in this unit? Explain your answer using concepts from this unit Part 3: During the baseball offieason (November through mid-March), Bryce bears a $1,000 cost of hearing the loud basketball games Candace is watching. Meanwhile, Candace gets a $1,500 benefit from listening to the basketball games. Using the Coase theorem, describe a potential private outcome that could be negotiated between Bryce and Candace be beneficial to each neighbor. Explain your answer [Extra Credit I point]: Using concepts discussed in the unit, provide one reason why Bryce and Candace might not be able to negotiate a mutually beneficial outcome.

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