Compare Two Situations

question 20

Multiple Choice

Compare two situations.(A) A firm is not legally responsible for damages that result from air pollution caused by its production of steel.(B) A firm is legally responsible for damages that result from its production of steel.Ronald Coase argued that if the property rights are assigned and transactions costs are low,

• A)bargaining between the firm and the victims of the air pollution caused by the firm will result in little reduction of pollution in either situation (A)or (B)because the firm has greater economic and political power than the victims.
• B)bargaining between the firm and the victims of the air pollution caused by the firm would lead to a greater reduction in pollution in situation (A)than situation (B).
• C)bargaining between the firm and the victims of the air pollution caused by the firm would lead to a smaller reduction in pollution in situation (A)than situation (B).
• D)bargaining between the firm and the victims of the air pollution caused by the firm would lead to an equal reduction in pollution in situation (A)and situation (B).

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Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic, concept, method, or decision.

Media Coverage

The reporting, broadcasting, or publishing of news and information by various media outlets, such as television, radio, newspapers, and the internet.

Misinformation Effect

The phenomenon where a person's recall of episodic memories becomes less accurate due to post-event information.

Fundamental Attribution Error

It is the tendency to overemphasize personality-based explanations for others' behaviors while underestimating the role of situational factors.