The idea that when externalities are present private parties can arrive at the efficient solution without government intervention under certain circumstance is known as ?
Correct answer: A. The coase theorem
- A. The coase theorem
- B. Arrow's impossibility theorem
- C. the drop -in-the bucket problem.
- D. the free rider problem
Explanation
The Coase theorem states that, with well-defined property rights and negligible transaction costs, private parties may bargain to an efficient outcome despite externalities. The other options concern collective choice or free-riding problems.
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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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