Suppose There Are Ten People Playing Cards in a Room

Multiple Choice

Suppose there are ten people playing cards in a room. One of them wants to smoke a cigar, nine of them dislike the smell of cigar smoke. The smoker values the privilege of smoking at $5, and each of the other nine people of the room would be willing to pay fifty cents for clean air in the room. The rules governing use of the room state that smoking is not allowed unless everyone agrees to allow smoking. If the rules governing the room instead stated that smoking is allowed unless everyone in the room agrees to prohibit it, then:

A) the non-smoking occupants will pay the cigar smoker to not smoke.
B) the cigar smoker will smoke and not have to pay the other occupants for the external cost.
C) the cigar smoker will smoke, and will pay each other occupant 50 cents.
D) the parties may or may not be able to reach a negotiated agreement depending on the bargaining strength of each.