Comment on the following statement: "The Coase theorem implies that the contending parties will come to the efficient solution regardless of where rights are initially assigned."
What will be an ideal response?
The statement is true. Suppose one individual likes it quiet while his neighbor likes loud music. If the individual has the right to a quiet environment, his neighbor can pay him to allow some noise. On the other hand, if he has no right to a quiet environment, he can pay his neighbor to refrain from making noise.
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If a player's strategy in a sequential game is to choose an action that stops the game early on, it is unnecessary to specify that player's plans for moves later on in the game when it would have been his turn to move again.
Answer the following statement true (T) or false (F)
Assume that a firm's marginal revenue just barely exceeds marginal cost. Under these conditions the firm should:
a. expand output. b. contract output. c. maintain output. d. There is insufficient information to answer the question.
The idea that a tax cut will create an incentive for people to increase their quantity of labor supplied, which will shift aggregate supply to the right and that will lower the price level and increase real GDP, is held by the
a. rational expectations school b. school of supply-side economics c. neo-Keynesian school d. classical school e. Keynesian school
The corporate decision on type and level of R&D activity is difficult because:
A. the interest-rate cost of funds is difficult to estimate. B. much of corporate R&D is based on the pursuit of science, not on the profit motive. C. expected returns lie in the future and are highly uncertain. D. total returns and marginal returns greatly diverge.