Which of the Following Is Not a Necessary Condition for the Coase

question 509

Multiple Choice

Which of the following is not a necessary condition for the Coase theorem?

• A) Property rights are clearly defined.
• B) There are no bargaining costs.
• C) The government intervenes to internalize the externality.
• D) There are only a few parties involved.

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Definitions:

Profit-Maximizing Firms

Businesses that operate with the objective to produce the quantity of output that maximizes the difference between total revenue and total cost.

Perfectly Competitive Market

A market structure characterized by a large number of small firms, homogeneity of products, and free entry and exit, leading to optimal distribution of resources.

Market Demand

The combined amount of a product or service that every consumer in a market is prepared and capable of buying at different price points.

Elastic

A characteristic of a good or service whose demand or supply changes significantly when its price changes, indicating sensitivity to price adjustments.