The Coase Theorem States That When Transactions Costs Are Low,then

question 108

Multiple Choice

The Coase theorem states that when transactions costs are low,then:

• A)bargaining will never lead to a socially efficient allocation.
• B)bargaining will lead to a socially optimal allocation only if liability is placed on the polluter.
• C)bargaining will lead to a socially optimal allocation only if liability is placed on the victim of pollution.
• D)bargaining will lead to a socially efficient allocation regardless of where liability is placed.
• E)the governmental intervention becomes absolutely necessary.

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Definitions:

Net Income

The total profit of a company after all revenues and gains are added together and all expenses and losses are subtracted.

Net Cash

The sum of all cash and cash equivalents that a company holds, subtracting liabilities that need to be paid immediately.

Operating Activities

The recurring operations of a business that pertain to providing its main goods or services and generate revenue.

Net Cash

The actual cash that is available with a company after all deductions, including expenses and liabilities, have been made.