The Coase Theorem Will Apply Only If

question 43

Multiple Choice

The Coase theorem will apply only if

• A)an individual who is not affected by the externality can negotiate a settlement between the parties imposing the externality and the parties that are harmed by the externality.
• B)the small number of people are involved.
• C)the market is perfectly competitive.
• D)the courts can be used to determine the amount of compensation that must be made to the damaged party.
• E)the amount of compensation that must be made to the damaged party is small.

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