According to the Coase Theorem, Private Parties Are Likely to Solve

question 57

Multiple Choice

According to the Coase theorem, private parties are likely to solve the problem of externalities if:

• A)the cost of bargaining is small.
• B)the contract is easy to enforce
• C)the number of parties involved is relatively small
• D)all of the above are true

---

Definitions:

Contract Rate

The agreed-upon interest rate specified in a contract, particularly relevant in loans and financing agreements.

Market Rate

The current price or interest rate at which goods, services, or securities are bought and sold in a competitive marketplace.

Bond Selling Price

The market price at which a bond is traded, which may be above (premium) or below (discount) its face value.

Par Value

The nominal or face value of a security or currency, as stated by the issuer.