The Coase theorem states that
A) government intervention is always needed if externalities are present.
B) assigning property rights is the only thing the government should do in a market economy.
C) under certain conditions, the property right to an activity will be acquired by the party that values it most.
D) a free-market equilibrium is the best solution to address externalities.
C
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Which of the following does Dwight Lee suggest as a solution to correct excessive pollution?
a. Reduce the use of petroleum-based fuels b. Place a tax on all large trucks and SUVs. c. Expand markets & property rights into areas where externalities (i.e., pollution) exist d. This is a market failure, these is no clear solution
When consumers have perfect information about the quality of the products they purchase, the problem of adverse selection is likely to arise
a. True b. False Indicate whether the statement is true or false
Membership in the Federal Reserve System is
a. limited to national banks. b. limited to state banks. c. required of national banks and open to state banks. d. forbidden to state banks.
Which of the following is a possible effect of automatic stabilizers on the federal budget?
A. An increase in the deficit when there is AD excess. B. A decrease in the deficit during an expansion. C. A decrease in the deficit during recessions. D. An increase in the structural deficit during recessions.