The Coase Theorem Says That If Property Rights Exist and the Costs

question 148

Essay

The Coase theorem says that if property rights exist and the costs of enforcing them are ________,then the market outcome is ________ and it doesn't matter who has the property rights.
A) low; inefficient
B) high; inefficient
C) low; efficient
D) high; efficient
E) stable; efficient

• A) low; inefficient
• B) high; inefficient
• C) low; efficient
• D) high; efficient
• E) stable; efficient

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Definitions:

Board of Directors

A group of individuals elected by shareholders to oversee the management and make important decisions for a corporation.

Dividend Yield

An indicator in finance measuring the dividends paid by a company each year against its share price.

Annual Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits, on an annual basis.

Cumulative Voting

A voting system that allows shareholders to concentrate all their votes on one candidate for the board of directors, offering more power to minority shareholders.