According to Coase,
A. externalities do not matter in truly competitive markets because people can always negotiate around them.
B. people in competitive markets can never negotiate to overcome externalities.
C. people in competitive markets often fail to overcome externalities because negotiating is costly.
D. people in competitive markets can overcome the principal-agent problem if the agents negotiate well.
Answer: C
You might also like to view...
The credit demand curve is the schedule that reports the relationship between the quantity of credit demanded and ________ in an economy, assuming all else equal
A) the average tax rate B) the annual inflation rate C) the nominal rate of interest D) the real rate of interest
If we assume that government borrowing crowds out private investment, then future generations will have a smaller capital stock. Ricardo's view is that this will not be the case, because people are forward looking. Do you agree?
What will be an ideal response?
The demand for labor is a derived demand. Employers hire workers until the: a. wage rate equals the average product of labor
b. wage rate equals the marginal revenue product of labor. c. average product of labor is zero. d. marginal product of labor is zero.
Total cost equals average cost multiplied by the quantity of output
a. True b. False Indicate whether the statement is true or false