Answer :
Answer:
Yes, if doctor pays at least $275 to designer, there will be no noise and designer will be able to produce without increases costs.
Explanation:
The surfboard designer makes a lot of noise.Doctor on the other hand needs peace to function. The doctor an shift to another building but rent is $350 more.
The surfboard designer can reduce noise through new technology but it costs $275.
Assuming that there is no cost involved in negotiations, both parties can be better off if the doctor pays at least $275 to designer to adopt new technology. The maximum amount the designer will be willing to give will be $350.
The doctor and designer can be better off if the doctor agrees to pay an equilibrium cost of $275 to the private designer for eliminating the noise of the building.
What is an equilibrium cost?
An equilibrium cost is the point where it is beneficial for both the parties to settle at and is able to provide the solution that the party intends to get done.
In the above example, the doctor will require $350 for moving to another building and an alternative option will be paying $275 to a designer for eliminating noise from the building.
In this case, the doctor has to pay the designer anywhere between $275 to $350 for meeting better ends for the doctor as well as for the private designer.
Hence, the doctor and designer will arrive at equilibrium costs if the doctor pay between $275 to $350 a month to the designer for eliminating the noise.
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