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:

Low Dividend Policy

A strategy where a company decides to distribute a smaller portion of its earnings in the form of dividends to retain more capital for growth.

Clienteles

Clienteles refers to groups of investors or customers who prefer certain policies or characteristics of a company, such as dividend policies, which cater to their specific needs or investment strategies.

Trading Range

Price range between the highest and lowest prices at which a stock is traded.

Dividend Yield

The ratio of a company's annual dividends to its current share price, represented as a percentage.