How does the deal affect surplus

Reference no: EM131806366

Question: Your neighbor never mows her lawn. You don't have any legal right to force her to mow, but the mess in her front yard is making your neighborhood unsightly and reducing the value of your house. The reduction in the value of your house is $5,000, and the value of her time to mow the lawn once a week is $1,000. Suppose you offer her a deal in which you pay her $3,000 to mow. How does this deal affect surplus?

opyions (pick one):

- The deal increases only your neighbor's surplus.

- The deal does not affect surplus.

- The deal increases your surplus but decreases your neighbor's.

- The deal increases only your surplus.

- The deal increases both your surplus and your neighbor's.

- The deal increases your neighbor's surplus but decreases yours.

Reference no: EM131806366

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