The Insight That People Can Always Arrive at Efficient Solutions

question 68

Multiple Choice

The insight that people can always arrive at efficient solutions to the problems caused by externalities if they can negotiate the purchase and sale of the right to perform activities that cause externalities is called the ________.

• A)Sherman Act
• B)Coase Theorem
• C)tragedy of the commons
• D)prisoner's dilemma

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Definitions:

Standard Costs

The predetermined costs associated with manufacturing a product or providing a service, used for budgetary and performance evaluation purposes.

Direct Labor Time Variance

A measure of the difference between the expected time to complete a task and the actual time taken.

Direct Labor Costs

The wages and related expenses for employees who are directly involved in the production of goods or services.

Rate Variance

The difference between the standard cost and the actual cost based on the rate of an input.