According to the Coase Theorem, Externality Problems

question 40

Multiple Choice

According to the Coase theorem, externality problems

• A)do not exist in reality, because all costs and benefits are internal to firms.
• B)can be solved through private negotiations without the need for government intervention.
• C)must only be resolved by government action, through either taxes or subsidies.
• D)can never be resolved adequately, because one party always gains while the other loses.

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