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:

Sincere Concern

Genuine care and consideration shown towards the feelings, circumstances, or well-being of others.

Prior Consultation

The process of seeking advice, opinions, or consent from relevant stakeholders before making decisions, especially in contexts affecting their interests.

Arbitration

A method of dispute resolution involving a neutral third party who makes a binding decision.

Conciliation

A process where a third party assists in resolving disputes between two parties by encouraging them to reach a mutual agreement.