The Coase theorem will apply only if
A. the courts can be used to determine the amount of compensation that must be made to the damaged party.
B. the number of people involved is small.
C. the amount of compensation that must be made to the damaged party is small.
D. an individual who is not affected by the externality can negotiate a settlement between the parties imposing the externality and the parties that are harmed by the externality.
Answer: B
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For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces
Which of the following is true about the comparative advantage between the two countries? A) Switzerland has the comparative advantage in chocolate. B) Germany has the comparative advantage in watches and chocolate. C) Germany has the comparative advantage in watches. D) Switzerland has the comparative advantage in watches.
The kinked demand curve model best reflects
A) mutual interdependence among sellers. B) a game theory approach to price-output decisions. C) price rigidities in oligopolistic markets. D) All of the above
The distribution of income in a market economy is determined by
a. the level of employment and prices of the factors of production. b. the prices of factors of production. c. largely unknown forces which economists seek to discover. d. decisions of government offices related to distribution.
The second-order condition for maximizing net benefits is:
A. d(MB)/dQ < d(MC)/dQ. B. d2N/dQ2 < 0. C. d2B/dQ2 < d2C/dQ2. D. All of the statements associated with this question are correct.