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1) The Coase Theorem asserts that private economic agents can resolve the problem of externalities between themselves. Which of the following is a requirement for the Coase Theorem to work? i. Property rights are initially allocated to the producer of the externality ii. There are no or negligible transaction costs iii. Large and efficient markets iv. It is possible to trade property rights relating to the externality a) II only b) II and III only c) I and II only d) II and IV only

1) The Coase Theorem asserts that private economic agents can resolve the problem of externalities between themselves. Which of the following is a requirement for the Coase Theorem to work? i. Property rights are initially allocated to the producer of the externality ii. There are no or negligible transaction costs iii. Large and efficient markets iv. It is possible to trade property rights relating to the externality a) II only b) II and III only c) I and II only d) II and IV only

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1) The Coase Theorem asserts that private economic agents can resolve the problem of externalities between themselves. Which of the following is a requirement for the Coase Theorem to work? i. Property rights are initially allocated to the producer of the externality ii. There are no or negligible transaction costs iii. Large and efficient markets iv. It is possible to trade property rights relating to the externality a) II only b) II and III only c) I and II only d) II and IV only e) I and IV only
Transcribed Image Text:1) The Coase Theorem asserts that private economic agents can resolve the problem of externalities between themselves. Which of the following is a requirement for the Coase Theorem to work? i. Property rights are initially allocated to the producer of the externality ii. There are no or negligible transaction costs iii. Large and efficient markets iv. It is possible to trade property rights relating to the externality a) II only b) II and III only c) I and II only d) II and IV only e) I and IV only
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