According to the Coase theorem, in order to solve a negative externality problem efficiently,
a. the property right must be assigned to the party with the least-cost alternative
b. the property right must be assigned to the victim of pollution
c. transaction costs must be high
d. transaction costs must be low
e. property rights must be determined by the courts
D
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The reason that the claim that floating exchange rates result in greater economic autonomy for individual countries may not be entirely accurate is that
A) empirical research finds no supporting data. B) policy makers are influenced by the effect of domestic policies on the exchange rate. C) there is no generally satisfactory method for measuring economic autonomy. D) it is based on the assumption of a gold standard. E) countries that run large trade deficits must increase exports to balance trade.
Vertically integrated firms can use transfer pricing
A) to avoid government price controls. B) as a way to compensate managers for transferring among departments in a vertically integrated firm. C) to avoid paying market prices for inputs. D) to shift profit.
In an oligopoly, the outcome is uncertain because price and output decisions depend on the response of rivals
a. True b. False Indicate whether the statement is true or false
Economic models do not have to completely describe every aspect of the economy in order to be useful
a. True b. False