A Meditation Class Meets on the Second Floor of a Building;

Multiple Choice

A meditation class meets on the second floor of a building; the first floor is a nightclub. The loud music from the club disturbs the classes. The club could be soundproofed for a cost of $5,000 or move at a cost of $8,000. The class cannot be soundproofed enough to overcome the music, but could be moved for $4,000. According to the Coase theorem, _____.​

A) the club should be soundproofed so both businesses can stay open
B) the club should be soundproofed because it is the one generating the externality​
C) the club should move rather than be soundproofed because eliminating an externality is better than compensating for it​
D) the class should move because it can eliminate the externality at a lower cost than can the nightclub​
E) whichever business has been there longer has a property right and the other should adjust​