State one important consequence of Coasian reasoning on the analysis of contracts


Coasian reasoning has one very important consequence for the analysis of contracts. If the costs of negotiating and enforcing contracts are low relative to the benefits, buyers and sellers will have incentives to make economically efficient arrangements that increase value, and they will avoid making contracts that destroy it. Where transactions are costly, some legal assignments of rights will be more efficient than others.

Economics

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If a perfectly competitive wheat farmer is maximizing its profit and then increases its output, the farmer's

A) total revenue increases, but total cost rises by more so that the farmer's total profit decreases. B) total revenue decreases and total cost increases, both thereby decreasing the farmer's total profit. C) total revenue does not change but total cost increases, thereby decreasing the farmer's total profit. D) marginal revenue increases, but so does marginal cost, so that the farmer's total profit increases. E) total revenue and total cost both rise, but the effect on the farmer's total profit is uncertain.

Economics

If the statistical discrepancy is zero, in order to calculate GDP from the value of net domestic product at factor cost, we must add

A) the value of intermediate goods and subtract the value of imports. B) direct taxes, subtract corporate profit, and add investment. C) indirect taxes, subtract subsidies, and add depreciation. D) subsidies, subtract indirect taxes and depreciation. E) indirect taxes, subsidies, and depreciation.

Economics

Many people who hold bonds

a. think they are poorer than they really are b. end up oversaving because of the paradox of thrift c. end up underconsuming d. mistakenly view the bonds as their personal assets and as the government's liabilities e. believe that the source of the interest they receive is the taxes they don't need to pay

Economics

If the exchange rate between the U.S. dollar and the Euro were 1.50 ($1.50 = one Euro), what would be the price in dollars of a German automobile that cost 40,000 Euros?

a. $10,000 b. $20,000 c. $60,000 d. $200,000

Economics