Under the Coase Theorem, a Private Solution to an Externality

question 46

Multiple Choice

Under the Coase theorem, a private solution to an externality yields _______ amount of efficiency and _______ distribution of surplus as compared to a government solution.

• A)the same; the same
• B)the same; a different
• C)a different; the same
• D)a different; a different

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Definitions:

Creativity

The ability to produce original and valuable ideas, involving imagination and the capacity to solve problems in novel ways.

Myelination

The process of forming a myelin sheath around a nerve to allow electrical impulses to transmit quickly and efficiently along the nerve cells.

Impulsiveness

A trait leading individuals to act on a whim, displaying behavior characterized by little or no forethought, reflection, or consideration of consequences.

Perseveration

The tendency to persevere in, or stick to, one thought or action for a long time.