Compare Two Situations

question 223

Multiple Choice

Compare two situations. (A) A firm is not legally responsible for damages that result from air pollution caused by its production of steel. (B) A firm is legally responsible for damages that result from its production of steel. Ronald Coase argued that

• A) bargaining between the firm and the victims of the air pollution caused by the firm will result in little reduction of pollution in either situation (A) or (B) because the firm has greater economic and political power than the victims.
• B) bargaining between the firm and the victims of the air pollution caused by the firm would lead to a greater reduction in pollution in situation (A) than situation (B).
• C) bargaining between the firm and the victims of the air pollution caused by the firm would lead to a smaller reduction in pollution in situation (A) than situation (B).
• D) bargaining between the firm and the victims of the air pollution caused by the firm would lead to an equal reduction in pollution in situation (A) and situation (B).

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Definitions:

Support Products

Support products are ancillary items or services that support or enhance the usability and performance of a primary product or service.

Components

Fundamental parts or elements that make up a whole system, machine, or device, each serving a specific function.

Derived Demand

A demand for a good or service that arises from the demand for another good or service.

Philips

A diversified technology company known for its electronics, healthcare, and lighting products.