Suppose pollution, which generates 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 equitable solution can only be reached if property rights are assigned to the victims of pollution and not the polluters.
B) an equitable solution can only be reached if property rights are assigned to the polluters, and not the victims of pollution.
C) an efficient solution can be reached regardless of the initial assignment of property rights.
D) government intervention is necessary to reach an efficient and equitable solution.
C
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A monopsony maximizes its profit by hiring the level of employment that sets
A) labor supply equal to labor demand. B) the value of marginal product equal to the wage. C) the value of marginal product equal to the marginal cost of labor. D) the value of marginal product equal to the demand for labor.
The figure above shows the market for transportation services, which produces an external cost due to the air pollution that is created. Suppose that the government decides to introduce a pollution tax
What is the tax per vehicle mile that will achieve the efficient outcome? A) $2 B) $4 C) $6 D) $8
Which of the following addresses agency costs?
a. advertising for employee positions in as many outlets as possible b. hiring only from job fairs c. instituting longer work days d. replacing closed offices with cubical office spaces
Refer to the information provided in Table 3.1 below to answer the question(s) that follow. Table 3.1Price per PizzaQuantity Demanded (Pizzas per Month)Quantity Supplied (Pizzas per Month)$31,200 600 61,000 700 9 800 80012 600 90015 4001,000Refer to Table 3.1. In this market there will be an excess demand of 300 pizzas at a price of
A. $6. B. $9. C. $12. D. $15.