According to Coase's theorem when property rights are well defined and legally enforceable and transactions costs are not prohibitive ?
Correct answer: B. participants will organize their transactions
- A. population growth leads to rigid land rights
- B. participants will organize their transactions
- C. violence displacement erosion and poverty are minimized
- D. individuals overuse of the biosphere is curtailed
Explanation
Coase's theorem states that with clearly defined, enforceable property rights and negligible transaction costs, affected parties can bargain and organise transactions to reach an efficient outcome. It does not specifically claim that population growth or poverty will be eliminated.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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