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.

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Definitions:

Efficient-Market Hypothesis

The theory that all available information is already reflected in securities prices, therefore making it impossible to consistently achieve higher returns than the overall market.

Security Prices

The market price at which a financial security is traded.

Risk Level

The degree of uncertainty associated with the potential for loss or undesirable outcomes in an activity or decision.

Market Efficiency

A condition in financial markets where prices fully reflect all available information, leading to assets being priced accurately and trades being executed fairly.