The Coase Theorem States That in the Presence of Externalities

question 33

Multiple Choice

The Coase theorem states that in the presence of externalities, a market economy will:

• A)always reach an efficient solution.
• B)never reach an efficient solution.
• C)reach an efficient solution if transaction costs are sufficiently low.
• D)reach an efficient solution only in the case of government regulation.

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Definitions:

Retroperitoneal

Behind the peritoneum.

Duodenum

The first section of the small intestine, following the stomach, where initial absorption of nutrients occurs.

Ascending Colon

Portion of the colon between the small intestine and the right colic flexure.

Falciform Ligament

Fold of peritoneum extending to the surface of the liver from the diaphragm and anterior abdominal wall.