The Coase Theorem States That

question 70

Multiple Choice

The Coase theorem states that

• A)transaction costs consist of marginal private costs and marginal social costs and are higher when exchange is subject to increasing marginal costs.
• B)transaction costs are the difference between marginal social costs and marginal private costs and are higher when exchange is subject to decreasing marginal costs.
• C)when transaction costs are significant, the resource-allocative outcome will be the same regardless of who is assigned the property rights.
• D)when transaction costs are insignificant, the resource-allocative outcome will be the same regardless of who is assigned the property rights.

---

Definitions:

Produced at Home

Refers to goods or services generated within a household, often not exchanged in formal markets, such as home-cooked meals or DIY projects.

GDP

Gross Domestic Product represents the complete market value of all final goods and services produced inside a nation's boundaries over a specific time frame.

Disposable Personal Income

The amount of money that households have available for spending and saving after income taxes have been accounted for.

Gross National Product

The total value of all goods and services produced by a country's residents and businesses, including those produced abroad, over a specific time period.