The Coase theorem implies that the initial allocation of property rights:
A. determines all aspects of the final outcome of the negotiated agreement.
B. does not determine which person will be entitled to engage in the externality generating activity, but does determine which person will receive compensation.
C. must be assigned to the person with the greatest costs.
D. determines which person will be entitled to engage in the externality generating activity, but does not affect which person will receive compensation.
Answer: B
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If the firm hires the 9th worker, what will happen to the average product of labor? Explain.
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Indicate whether the statement is true or false
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