What is the Coase theorem? What conditions need to be present for this theorem to work?
What will be an ideal response?
The Coase theorem states that if property rights exist, only a small number of people are involved, and transactions costs are low, then private transactions are efficient and the outcome is not affected by who is assigned the property right.
The conditions that need to be present for the Coase theorem to work are:
• property rights exist;
• only a small number of people are involved;
• the transactions costs are low.
If these conditions are met, then the Coase theorem applies and there are no externalities.
You might also like to view...
Which population category equals the sum of employed and unemployed people?
A) working-age population B) labor force C) young and institutionalized D) not in the labor force
A consequence of an incentive contract for employees is that
a. employees must incur additional risk b. employee level risk is reduced c. employer level risk is reduced d. there are no risk related consequences
The production possibilities curve shows all possible combinations of
A) two goods that are desired by society. B) two goods that can be efficiently produced with a given set of resources. C) two goods that can be purchased given the prices of the goods. D) two goods that two countries can trade with each other.
Describe the relationship between marginal cost and average total cost
What will be an ideal response?