The Coase theorem is significant because it
A. implies that no transaction costs are associated with solving externalities.
B. shows that property rights can be assigned.
C. shows that under certain conditions externalities can be corrected in the market without resorting to nonmarket means.
D. a and b
Answer: C
You might also like to view...
Refer to the graph below for a natural monopoly. Assume the demand for the natural monopoly is originally D1. Now suppose a second firm enters the market and the demand for each firm becomes D2. The result will be
a. profit to rise for both firms.
b. profit to fall for the original natural monopoly firm and a profit to be earned by the new second firm.
c. profits to continue to be enjoyed by the original natural monopoly but a loss for the new second firm.
d. losses for both firms.
The determination of which goods are public goods depends on: a. public laws
b. normative considerations. c. whether it is produced directly by the government or produced by a private sector firm. d. whether it is possible to exclude additional users from consuming the good if they do not pay for it.
One can determine producers' surplus if the minimum selling price and the _____________ are known
A) price received B) price paid C) tax paid D) tax received E) a and c
If an economy has to sacrifice only one unit of good X for each unit of good Y produced throughout the relevant range, then its production possibilities curve has a(n):
A) zero slope. B) constant, negative slope. C) increasing, negative slope. D) decreasing, negative slope.