How can external costs be eliminated by assigning property rights?
What will be an ideal response?
The existence of a negative externality means some group must bear some of the costs of a production or consumption activity for which they are not involved. The Coase theorem implies that assigning a property right to either the group generating the externality or the group bearing the externality costs will eliminate the inefficient allocation of resources. The Coase theorem applies if the number of parties involved is small and if transactions costs are low.
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Use the following table to answer the next question.Current AccountFinancial AccountCapital Account-$753,438 $30,696One possible explanation for this situation is ________.
A. people in other countries prefer buying U.S. financial assets B. people in other countries prefer imported goods to domestic goods C. domestic residents have a preference for domestic non-produced assets D. people in other countries prefer to consume their income rather than save it
If the value of the U.S. dollar changes from 1.4 euros to 1.2 euros, we would expect that the United States would experience a ________ in exports and a ________ in imports
A) rise; rise B) fall; fall C) rise; fall D) fall; rise
A lagging variable ________
A) reaches a peak or trough before the turning point of the business cycle B) reaches a peak or trough after the turning point of the business cycle C) reaches a peak or trough at the same time as the turning point of the business cycle D) all of the above E) none of the above
An increase in production possibilities is known as
A. Predictable growth. B. Factor expansion. C. Economic growth. D. Upward mobility.