The Coase Theorem Is the Idea That

question 90

Multiple Choice

The Coase theorem is the idea that:

• A) individuals can reach an efficient equilibrium through private trades, even in the presence of an externality.
• B) there are always mutually beneficial trades waiting to be exploited, and that creates a clear role for government taxation.
• C) the actions of private individuals and firms are insufficient to ensure efficient markets.
• D) None of these statements is true.

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Definitions:

Merchandise

Goods or products that are bought and sold by businesses in the course of their trade or business operations.

Sales Returns and Allowances

Transactions in which customers return damaged or unsatisfactory products for refunds or credit, and adjustments made to sales revenue for these returns or granted concessions.

Accounts Receivable

Outstanding payments from customers to a firm for delivered or utilized goods or services awaiting settlement.

Merchandise Return

The process whereby customers return previously purchased merchandise to the seller for a refund, store credit, or exchange.