The Proposition That If Private Parties Can Bargain Without Cost

question 223

Multiple Choice

The proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own, is called

• A)the Pigovian theorem.
• B)a corrective tax.
• C)the externality theorem.
• D)the Coase theorem.

---

Definitions:

Conventional Level

A stage in Kohlberg's theory of moral development where individuals adhere to rules and norms to gain social approval or maintain social order.

Autonomous morality

A stage of moral development in which an individual's moral reasoning is based on personal principles and understanding of right and wrong.

Piaget's Theory

A theory of cognitive development that describes how children construct a mental model of the world through stages of cognitive growth.

Objective Morality

The belief in moral truths that are universal and independent of individual opinions or feelings.