The Coase Theorem Says That Private Bargains Can Ensure an Efficient

question 241

Multiple Choice

The Coase theorem says that private bargains can ensure an efficient market equilibrium even when externalities exist if:

• A) the government does not involve itself in the process.
• B) the market is sufficiently competitive.
• C) the number of market participants is large.
• D) transaction costs are low and property rights are clearly defined.

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Definitions:

Covariance

A measure that indicates the extent to which two variables change together; positive covariance indicates that both variables tend to move in the same direction.

Conditional Probabilities

The probability of a specific event happening after another event has already taken place.

IUPAC

The International Union of Pure and Applied Chemistry, an organization that sets standards for naming chemical compounds.

Compound

A mixture resulting from the chemical combination of two or more elements in exact proportions.