The proposition that if property rights are well defined and there are no transaction costs, an efficient allocation of resources will result even if externalities exist, is known as __________________
a. transaction costs
b. Hartwick's rule
c. the Coase Theorem
d. Coase's Law
e. the Hayes Theorem
Ans: c. the Coase Theorem
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The terms of trade between two countries refer to
A. The terms set by the World Trade Organization for trade. B. The amount of good A given up for good B. C. The rules governing trade between the two countries. D. What price the two countries agree upon for their imports and exports.
A unit tax of $10 has been levied on a good. The equilibrium price of the good will most likely
A. decrease by $10. B. increase by $10. C. remain unchanged. D. increase by an amount less than $10.
As part of recent cutbacks, Paul just accepted a 10% cut in pay. Now he brews coffee at home instead of stopping at Starbucks every day. Based on this behavior, we can say home-brewed coffee:
A. and Starbucks coffee are -normal goods for Paul. B. will become a normal good for Paul over time. C. is an inferior good, while Starbucks coffee is a normal good for Paul. D. is a normal good, and Starbucks coffee is an inferior good for Paul.
Inheritance accounts for about
A. 10 percent of income inequality. B. 15 percent of income inequality. C. 5 percent of income inequality. D. 30 percent of income inequality.