Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The accompanying table shows themonthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window.Quick Burger Operates aQuick Burger Does NotDrive-Through Window$ 24,000$ 17,000Operate Drive-Through Window$ 20,000$ 23,000Quick BurgerThe Sunshine CaféSuppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome?Multiple ChoiceThe Sunshine Cafe pays Quick Burger $5,000 per month not to operate the drive-through window.The Sunshine Cafe pays Quick Burger $12,250 not to operate the drive-through window.Quick Burger pays The Sunshine Cafe $15,250 to operate the drive-through window.Quick Burger pays The Sunshine Cafe $5,000 to operate the drive-through window.

In the given table both the restaurants have different payoffs in these two scenarios. Quick Burger…

Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The accompanying table shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger The Sunshine Café Quick Burger Operates a Drive-Through window $ 24,000 $17,000 Quick Burger Does Not Operate Drive-Through Window $ 20,000 $ 23,000 Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome? Multiple Choice The Sunshine Cafe pays Quick Burger $5,000 per month not to operate the drive-through window. The Sunshine Cafe pays Quick Burger $12.250 not to operate the drive-through window. Quick Burger pays The Sunshine Cafe $15.250 to operate the drive-through window. Quick Burger pays The Sunshine Cafe $5,000 to operate the drive-through window. O O

Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The accompanying table shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger The Sunshine Café Quick Burger Operates a Drive-Through window $ 24,000 $17,000 Quick Burger Does Not Operate Drive-Through Window $ 20,000 $ 23,000 Suppose Quick Burger has the legal right to operate a drive-through window, and Quick Burger and the Sunshine Café can negotiate with each other at no cost. Which of the following arrangements would lead to the socially optimal outcome? Multiple Choice The Sunshine Cafe pays Quick Burger $5,000 per month not to operate the drive-through window. The Sunshine Cafe pays Quick Burger $12.250 not to operate the drive-through window. Quick Burger pays The Sunshine Cafe $15.250 to operate the drive-through window. Quick Burger pays The Sunshine Cafe $5,000 to operate the drive-through window. O O

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 6PA

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