Explain the Coase theorem. In order for the Coase theorem to be applicable, explain which three conditions must be satisfied. Give an example to show how the Coase theorem can be applied
What will be an ideal response?
The Coase theorem is the idea that when externalities are present, private parties can arrive at the efficient solution without government involvement under certain conditions. These three conditions are: basic rights must be clearly understood, there must be no impediments to bargaining, and only a few people can be involved. Answers will vary about applications of the Coase theorem.
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Which of the following policies would increase the growth rate of an economy in the endogenous growth model with human capital?
A) mandatory schooling. B) minimum wages. C) redistributive taxation. D) lump-sum taxation.
Contrast the effects to the euro and the U.S. dollar of a reduction in European tariffs on U.S. imports, ceteris paribus.
What will be an ideal response?
Sheila sells corn in a perfectly competitive market. This month Sheila receives a higher price for a bushel of corn than she did last month. Which of the following might explain this?
A. The market demand increased for corn. B. The market demand decreased for corn. C. Firms entered the market. D. Sheila's costs have decreased.
If total revenue is unrelated to price, then demand is unitary elastic.
Answer the following statement true (T) or false (F)