Alexander lives in an apartment building and gets a $250 benefit from playing his stereo. mary, who lives next door to alexander and often loses sleep due to the loud music coming from alexander's stereo, bears a $350 cost from the noise. mary would like to offer alexander some money to turn down the volume on his stereo. if mary had to hire a lawyer to draw up the contract, what is the maximum amount she could pay to the lawyer to ensure that both alexander and mary would benefit from the agreement?

Question

Lesly Johnson

Business

26 February, 17:03

Alexander lives in an apartment building and gets a $250 benefit from playing his stereo. mary, who lives next door to alexander and often loses sleep due to the loud music coming from alexander's stereo, bears a $350 cost from the noise. mary would like to offer alexander some money to turn down the volume on his stereo. if mary had to hire a lawyer to draw up the contract, what is the maximum amount she could pay to the lawyer to ensure that both alexander and mary would benefit from the agreement?

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Porter Small · Answer 1

Answer: The answer is $100

Explanation: This is because the difference between Alexander's benefit and Mary's cost due to inconvenience is:

$350 - $250 = $100.

The maximum amount Alexander could benefit from Mary is $250. This is because, If Mary pays legal fees of $100 to the lawyer, she will still have $250 to offer the maximum benefit to Alexander to reduce the noise.

However, she might still be able to create a bargain in which she will ask for a reduction in the payment made to Alexander so that she can also make some gain.

If Alexander demands for anything above $100 in trying to push for his maximum benefit, Mary will not be able to make any gain.