In Which of These Situations Would the Coase Theorem Be

question 93

Multiple Choice

In which of these situations would the Coase theorem be MOST likely to work?

• A) A thousand firms use a lake, there are no other users, all their costs could be reduced somewhat by polluting, but all would have lower water intake costs if the lake were clean.
• B) A group of nine firms use a lake, there are no other users, all their costs could be reduced somewhat by polluting, but all would have lower water intake costs if the lake were clean.
• C) Worldwide deep sea fishing rights need to be negotiated among thousands of fishermen from different countries.
• D) One hundred and fifty nations need to come to an accord about CFC generation to combat ozone depletion.
• E) A group of chemical firms high upstream on the Mississippi River have emissions that affect not only communities downstream along the river, but around the Gulf of Mexico as well.

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Definitions:

Earned Income Tax Credit

A refundable tax credit for low- to moderate-income working individuals and families, especially those with children.

Minimum Wage Laws

Regulations that dictate the lowest legal hourly compensation employers must pay their workers.

Minimum Wage

The lowest wage rate that employers can legally pay their workers, established by government regulation.

Employment Level

A measure indicating the number of people currently employed in an economy, typically not including those self-employed.