Suppose that a mechanic owns a building and is renting part of the building's space to a library. Further suppose that because the mechanic is the owner, he has the right to make noise during the day while he fixes cars. While the library cannot insist on a quiet environment, it could move to a quieter building. However, rent in the next best building is $350/month more than rent in the noisy building. The mechanic can adopt a new technology that eliminates the noise for $275/month. Given this situation, can the library find a private solution with the mechanic that will make both better off?

The correct answer is letter "B": Yes, but there is only a range of payments that the library will pay the mechanic to make them both better off.

Explanation:

The library must analyze the benefit/cost of the possible solution for the noise problem. A library itself cannot provide a noisy atmosphere to readers. Moving the library to the next best building implies spending $350 monthly more for rent. However, the mechanic can eliminate the noise with a device that costs $275 per month. Thus, the library should share the expenses with the mechanic for the noise-elimination device to reduce the costs of having a noise-free environment obtaining the benefit desired.

The both can share the cost.

Explanation:

Since librarian is the person who is most affected by the noise made by mechanic work. And choosing other place will cost him $350 extra so therefore if librarian will share the most burden of $275 it will benefit both of them. In this case the librarian does not have to spend $350 and the mechanic will be having a noise free workstation.