Suppose That Maria Wants to Dine at a Fancy Restaurant,but

Multiple Choice

Suppose that Maria wants to dine at a fancy restaurant,but the only available table is in the smoking section.Maria dislikes the smell of cigarette smoke.She notices that only one person,John,is smoking in the smoking section.Maria values the absence of smoke at $25.John values the ability to smoke in the restaurant at $15.Which of the following represents an efficient solution in the absence of transaction costs?

A) John continues to smoke because he has a right to smoke in the smoking section.
B) Maria offers John between $15 and $25 not to smoke.John accepts, and both parties are better off.
C) Maria offers John between $15 and $25 not to smoke.John declines because he has a right to smoke in the smoking section.
D) Only a government policy banning smoking in restaurants will solve this problem.