In 2003, conservation groups paid western cattlemen to move their herds away from wild buffalo herds so that the buffalo would have more feed and not have to compete with the cattle. What has this got to do with regulation and the Coase Theorem?
What will be an ideal response?
The Coase Theorem holds that when property rights are clearly assigned and contracting costs are sufficiently low, the ultimate allocation of resources will be efficient. An offer of payment for moving their herds leads the cattlemen to internalize the costs of their cattle grazing near the buffalo herds. No regulation is necessary to achieve this efficient outcome other than well-defined and enforceable property rights.
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Keynes and his followers believed that
A) the economy could not operate at any level of real Gross Domestic Product (GDP) less than full capacity. B) capitalism was one economic system that guaranteed full employment. C) wages and prices in the short run were flexible. D) there was no guarantee that a capitalist economy would reach a full employment equilibrium.
Since firms outside an industry cannot have an incentive to enter the industry in equilibrium, firms inside a monopolistically competitive equilibrium must be making zero profit.
Answer the following statement true (T) or false (F)
The egalitarian view of equity would lead to:
A) equal allocations of goods across all persons. B) maximizing the utility of the least-well-off person. C) maximizing the total utility of all society members. D) none of the above
Which of the following is a shortcoming of GDP?
a. GDP includes an estimate of illegal transactions. b. GDP excludes changes in inventories. c. GDP excludes business investment spending. d. GDP excludes nonmarket transactions.