Question

Farmer Owens has an apple orchard that must be pollinated by bees in order to bear fruit. Farmer​ Owens's neighbor,​ Maude, owns beehives with bees that can pollinate the apple trees. Suppose the benefit of the bees to Farmer Owens is $5,000 per year. Suppose the bees provide no benefit to Maude but she must pay $3,000 per year to maintain the hives. If Farmer Owens and Maude engage in Coase​bargaining, what would likely​ result?
A. Farmer Owens would pay Maude between $3,000 and $5,000 to maintain the hives.

B. Maude would pay Farmer Owens between ​$3,000 and ​$5,000 to maintain the hives.

C. Farmer Owens would pay Maude between​ $0 and $5,000 to maintain the hives.

D. Farmer Owens would pay Maude at least ​$5,000 to maintain the hives.

E. Farmer Owens would not be willing to pay Maude an amount such that she would maintain the hives.

Answer 1

Answer:

E. Farmer Owens would not be willing to pay Maude an amount such that she would maintain the hives.

Explanation:

Remember, coerce​ bargaining implies that one party to a bargain uses their ability or privilege or advantage to force or pressure the other party to accept the bargain.

Hence, Farmer Owens, who seems to have a better advantage over Maude would likely coerce her into accepting his offer by not been willing to pay Maude an amount such that she would maintain the hives.