Adam plays Nickelback tapes in his backyard that drives his neighbour Blair crazy. The marginal utility to Adam is $750.00. The disutility to Blair is $900.00.

(a)From the point of view of welfare economics, is it efficient for Adam to play Nickelback?

(b)Assuming transaction costs are zero, how might the Theorem of Coase resolve this?

(c)A bylaw is passed prohibiting noise that disturbs neighbours. What will Adam and Blair do?

(d)What is the maximum legal fee that can be charged to still permit the actions Blair or Adam take in (b) and (c)?

(e)What are the law and economic issues involved if Blair recruits other neighbours who have a disutility to Nickelback to help her?