Peter Studies at the Coffee Shop Around the Corner, at the Same

Multiple Choice

Peter studies at the coffee shop around the corner, at the same time that John talks loudly on his cell phone. The costs and benefits of each cell phone call made by John are given by the following table:

$\begin{array}{|l|r|r|}\text { \# of cell phone calls}&\text { MarginalCosts to Peter} &\text { MarginalBenefits toJohn}\\\hline 0 & \$ 0 & \$ 0 \\\hline 1 & \$ 2 & \$ 10 \\\hline 2 & \$ 6 & \$ 8 \\\hline 3 & \$ 10 & \$ 6 \\\hline\end{array}$ If the both Peter and John could negotiate a settlement without transactions costs, how many phone calls would John end up making if Peter had the rights to stop any cell phone calls from taking place at the coffee shop?

A) 2
B) 0
C) 1
D) 3