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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Definitions:

Abandoned

In contract law, the condition that exists when a minor has left home and given up all rights to parental support.

Garbage Man

A colloquial term for a sanitation worker who collects and disposes of waste and recycling from households and businesses.

Diamond Ring

A diamond ring is a piece of jewelry that features diamond(s) set into a band, commonly given to signify engagement or other important personal milestones.

Acts of God

Natural catastrophic events, such as earthquakes, floods, or hurricanes, that cannot be anticipated or controlled, often used in legal contexts to excuse parties from contractual obligations.