According to the Coase Theorem, Externalities

question 184

Multiple Choice

According to the Coase theorem, externalities

• A)must usually be internalized by taxation or subsidy.
• B)can be internalized by the market under certain conditions.
• C)result when firms fail to maximize profits.
• D)cannot be internalized if property rights are assigned.
• E)are not relevant to the issue of market failure.

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Definitions:

Equator

An imaginary line around the Earth equidistant from the North and South Poles, marking the latitude 0°.

El Niño

A climate pattern that occurs in the Pacific Ocean, characterized by the unusual warming of surface ocean waters in the central and eastern tropical Pacific.

Eastern Pacific Basin

A region of the Pacific Ocean bounded by the Americas to the east and Asia and Australia to the west, known for its deep ocean trenches and marine biodiversity.

Ocean Current

A continuous, directed movement of seawater generated by forces acting upon it such as wind, the Coriolis effect, breaking waves, and differences in temperature and salinity.