Which of the Following Statements Is Consistent with the Coase

question 152

Multiple Choice

Which of the following statements is consistent with the Coase theorem?

• A)In the case of positive transaction costs, a property rights assignment (made by a court)will be undone if it benefits the relevant parties to undo it.
• B)In the case of zero transaction costs, the resource allocative outcome will be the same no matter who is assigned the property right.
• C)Taxes can do what property rights assignments cannot.
• D)The market can solve all negative externality problems.

---

Definitions:

Interest Owed

The amount of interest that has been incurred but not yet paid over a specific period.

Overstatement

This refers to the act of reporting a figure in financial statements that is higher than the actual or true value.

Unearned Rent

Refers to the amount received by a landlord for rent which has not yet been earned because the rental period has not occurred.

Rent Revenue

Income received from leasing out property or equipment to another party for a specified term.