The Coase Theorem Tells Us That in the Presence of External

question 44

Multiple Choice

The Coase theorem tells us that in the presence of external costs in production,

• A)the government must intervene in the market to assure that the efficient level of output is produced.
• B)private parties can negotiate to produce the good at a level where marginal willingness to pay for the good by consumers is zero.
• C)private parties can never arrive at the efficient solution.
• D)under certain conditions,private parties can arrive at the efficient solution without government involvement.
• E)and if transactions costs are high,then only the private sector will be able to produce the efficient amount of the good.

---

Definitions:

Effective Flow

The efficient and smooth process of operations and tasks in an organizational or project setting.

Continuous Flow

A production process where items move from one step to the next with minimal waiting, aiming to maximize efficiency and reduce waste.

Productivity Obstacle

Any factor that impedes the efficiency and effectiveness with which work can be performed and output can be generated.

Poor Communication

Inadequate exchange of information that leads to misunderstandings, errors, and inefficiencies in an organizational setting.