Which of the Following Describes the Idea That Private Negotiations

question 21

Multiple Choice

Which of the following describes the idea that private negotiations between people will lead to an efficient resolution of externalities, regardless of who has the property rights, as long as the property rights are defined?

• A)Adverse selection problem
• B)Internality theorem
• C)Lerner law of private property
• D)Coase theorem
• E)Tragedy of the commons

---

Definitions:

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Variable Costing

A pricing approach that incorporates only variable production expenses—such as direct materials, direct labor, and variable manufacturing overhead—into the cost of products.

Absorption Costing

A costing method that assigns all manufacturing costs, both fixed and variable, to products.

Net Income

The total earnings of a company after subtracting all expenses from revenue.