According to the Coase Theorem, Private Markets Will Solve Externality

question 420

Multiple Choice

According to the Coase theorem, private markets will solve externality problems and allocate resources efficiently as long as

• A)the externalities that are present are positive, not negative.
• B)government assigns property rights to the harmed party.
• C)private parties can bargain with sufficiently low transaction costs.
• D)businesses determine an appropriate level of production.

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Definitions:

Times Interest Earned

A ratio that measures a company's ability to meet its interest payments on outstanding debt.