The Coase Theorem Asserts That the Private Market Will Always

question 68

Multiple Choice

The Coase theorem asserts that the private market will always solve the problem of externalities and allocate resources efficiently

• A)even if private parties experience substantial costs of bargaining.
• B)even if the initial distribution of legal rights is skewed in favor of some private parties over others.
• C)only when there is a large number of private parties that engage in bargaining.
• D)All of the above are correct.

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Definitions:

Potential Energy

The energy stored within a physical system due to the position, arrangement or state of its constituents, capable of causing movement.

Work

Any change in the state or motion of matter.

Position

The location of something or someone in relation to other objects or individuals.

Endergonic Reaction

A nonspontaneous reaction; a reaction requiring a net input of free energy. Compare with exergonic reaction.