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The Coase Theorem Asserts That, If Externalities Are Present and If

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The Coase theorem asserts that, if externalities are present and if private parties can bargain over the allocation of resources at no cost, then


Definitions:

Tax Credit

An amount subtracted from the income tax owed; the most popular credits are the Child Care Tax Credit and the Earned Income Credit.

Taxable Income

The amount of an individual's or corporation's income used to determine how much tax is owed, calculated as gross income minus deductions and exemptions.

Energy-Efficient Furnace

A heating system designed to use less energy for the same level of heating comfort compared to less efficient models.

Exemption

Information included on tax forms that lowers taxes; exemptions include dependents as well as the taxpayer.

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