The Coase Theorem Tells Us That in the Presence of External

question 94

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)then 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.

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Definitions:

Distributive Justice

The perceived fairness in the allocation of resources and burdens among members of a society.

Exit Incentives

Benefits offered to employees to encourage voluntary resignation or retirement, often used in downsizing or restructuring initiatives.

Lending Workers

The practice of temporarily assigning employees to work for another organization or within a different part of the same organization.

Extending Reductions

The process of increasing the scope or duration of cost-cutting or resource-saving measures.