Gretchen is a writer who works from her home. Gretchen lives next door to Randall, the trumpet player for a local band. Randall needs lots of practice to earn his share of the band’s profit, which will amount to $350. Gretchen gets distracted by Randall’s trumpet playing but she needs to get her writing done to earn $570 for her current article. If Randall owns the right to play his music and Gretchen needs to hire a lawyer to help her reach an agreement with Randall, then what price is Gretchen willing to pay the lawyer? a. less than $350 b. less than $920 c. less than $220 d. less than $570

a. less than $350

Explanation:

Since Randall needs lots of practice to earn his share of the band’s profit, which will amount to $350.

Gretchen gets distracted by Randall’s trumpet playing but she needs to get her writing done to earn $570 for her current article.

If Randall owns the right to play his music and Gretchen needs to hire a lawyer to help her reach an agreement with Randall, then the price that Gretchen is willing to pay the lawyer will be less than $350

The reason for the price being less than $350 is based on the simple logic that Gretchen could as well pay Randall his share of the band’s profit, which will amount to $350, for him to stop disturbing her while she writes, than to pay a lawyer that amount and still spend extra time engaging the lawyer.

A) less than $350

Explanation:

In economics, the Coarse Theorem for conflict resolutions argues that both parties should negotiate an economically optimal solution regardless of the original property rights.

In this case, Randall earns $350 for playing the trumpet, while Gretchen earns $570 for writing an article. Since both things are incompatible, Gretchen must find a way to convince Randall to stop playing the trumpet, either by paying him at least $350 (which equals his economic benefit of playing the trumpet) or by hiring a lawyer that costs her less than $350.

If hiring the lawyer costs more than $350, then Gretchen should just pay Randall.

you had the wrong answer

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.