Question

Abe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking. Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is that
Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm

Answer 1

Answer:

Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm

Explanation:

The answer is already stated within the question, but I'll provide  the explanation.

In order to reach a solution, Jenny would have to offer Abe an amount to get rid of the dog that is more than Abe's benefit of owning the dog, which is $200.

On the other hand, since Jenny bears a cost of $400 from the bark, she would only be willing to spend as much as $400 to resolve the situation. Therefore, the acceptable range for the amount of the agreement for both parts is:

$200 < X < $400.

Since $300 is within that range. Jenny paying Abe $300 to give the dog to his parents is a possible solution.

Answer 2

Answer:

Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm

Explanation:

Since the dog is a disturbances to jenny, and the benefit of owning the dog to Abe is $200 and it is assumed that she has a legal right to own the dog, but the neighbor is disturbed by the barking of the dog, is she wishes to pay her off, she needs to pay up to $400 for the cost of getting rid of the dog for disturbing her with the barking. But they can only come into agreement, with both of the them reducing and adding in the expected price which is $300.

And if we read the question carefully, we would be able to see that the answer can be found in the question.