Coase Argues That Every Case of Externalities

question 13

Multiple Choice

Coase argues that every case of externalities

• A) has a clearly identifiable cause.
• B) requires government intervention if efficiency is to be achieved.
• C) can be traced back to a principal-agent problem.
• D) is reciprocal in nature.

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Definitions:

Probability

The quantification of the chance that an event will happen, expressed as a number ranging from 0 to 1.

Random Variable

A Random Variable is a variable whose possible values are numerical outcomes of a random phenomenon.

Normal Curve

A symmetrical, bell-shaped distribution where most occurrences take place around the mean and probabilities for values taper off as they move away from the mean.

Standard Deviation

A statistic that measures the dispersion or variability of a dataset relative to its mean, used to quantify the amount of variation.