The Coase Theorem Suggests That Private Solutions to the Externality

question 158

Multiple Choice

The Coase theorem suggests that private solutions to the externality problem:

• A)will always allocate resources efficiently if private parties can bargain without cost
• B)are effective under all conditions
• C)are only efficient when there are negative externalities
• D)may not be possible because of the distribution of property rights

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Definitions:

Negative Reinforcement

A behavioral modification technique where a response increases because a negative condition is removed or avoided.

Tardiness

The act of being late or delayed beyond the scheduled or expected time.

Intermittent Reinforcement

The giving of rewards for behaviour only periodically.

Punishment

A consequence applied in response to undesired behavior, intended to reduce or eliminate that behavior.