Mali owns a bakery. Next door, a fish and chip shop, owned by Goodness, has recently opened Mali notices that since Goodness' shop opened, his bakery sales have gone down because his clients don't like the strong fish smell. His profits were R25,000 per month before Goodness' shop opened, and his profits are now R18,000 per month Goodness could install a filter that would remove the fishy smell, but this will cost her R5,000 per month to install and run Goodness currently (before any possible filter costs) makes R30,000 per month If Goodness is legally liable for smell-related damages to Mall, and there are no negotiation costs, will she install the filter? Yes, she will install and pay for it No. Yes, she will install and Mali will pay for it

Mali owns a bakery. Next door, a fish and chip shop, owned by Goodness, has recently opened Mali notices that since Goodness' shop opened, his bakery sales have gone down because his clients don't like the strong fish smell. His profits were R25,000 per month before Goodness' shop opened, and his profits are now R18,000 per month Goodness could install a filter that would remove the fishy smell, but this will cost her R5,000 per month to install and run Goodness currently (before any possible filter costs) makes R30,000 per month If Goodness is legally liable for smell-related damages to Mall, and there are no negotiation costs, will she install the filter? Yes, she will install and pay for it No. Yes, she will install and Mali will pay for it

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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