Suppose a negative externality exists in a market. If transactions costs are low and parties are willing to bargain then, according to the Coase theorem
A) an efficient solution can be reached only if property rights are assigned to the polluters.
B) government intervention is critical to reach an efficient solution.
C) an efficient solution can be reached only if property rights are assigned to the victims of the pollution.
D) an efficient solution can be reached regardless of the initial assignment of property rights.
D
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A production function is
a. a technique for determining the most profitable rate of output. b. the relationship between a combination of inputs and a quantity of output. c. an important factor in determining the shape of the long-run supply curve. d. All of these.
Social insurance programs are conditioned on events, rather than means
Indicate whether the statement is true or false
Suppose there are three power-generating plants, each of which has access to 5 different production processes. The table below summarizes the cost of each production process and the corresponding number of tons of smoke emitted each.ProcessABCDE(smoke/day)(4 tons/day)(3 tons/day)(2 tons/day)(1 tons/day)(0 tons/day)Cost to Firm X ($/day)$500$514$530$555$585Cost to Firm Y ($/day)$400$420$445$480$520Cost to Firm Z ($/day)$300$325$360$400$550 The least costly way of lowering smoke emissions from 12 tons to 9 tons per day would be for:
A. Firm X to emit 2 tons, Firm Y to emit 3 tons and Firm Z to emit 4 tons. B. Firm X to emit 1 ton, Firm Y to emit 4 tons and Firm Z to emit 4 tons. C. each firm to reduce emissions by 1 ton, emitting 3 tons each. D. Firm X to emit 4 tons, Firm Y to emit 3 tons and Firm Z to emit 2 tons.
As new firms enter an increasing-cost industry
A. the LRAC curve shifts up. B. the position of the LRAC curve doesn't change, but firms move down their LRAC curve. C. the position of the LRAC curve doesn't change, but firms move up their LRAC curve. D. the LRAC curve shifts down.