A. there are no transaction costs.
B. each affected party has equal power in the negotiations.
C. the party affected by the externality has the initial property right to be left alone.
D. There are a large number of affected parties.
E. the government requires them to negotiate with each other
Related Mcqs:
- According to Coase’s theorem when property rights are well defined and legally enforceable and transactions costs are not prohibitive ?
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 - The Coase theorem states that ?
A. public goods should be produced up to the point where the additional benefit received by society equals the additional cost of producing the good
B. under certain conditions, private parties can arrive at the efficient solution without government involvement
C. the private sector will fail to produce the efficient amount of a public good because of the free-rider problem.
D. if there are external costs in production the government must intervene in the market to assure that the efficient level of output is produced - The idea that when externalities are present private parties can arrive at the efficient solution without government intervention under certain circumstance is known as ?
A. The coase theorem
B. Arrow’s impossibility theorem
C. the drop -in-the bucket problem.
the free rider problem - Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land Note that wages are the returns to labor and rents are the returns to land According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B: A. wages and rents should fall in Country A B. wages and rents should rise in Country A C. wages should rise and rents should fall in Country A D. wages should fall and rents should raise in Country A ?
XA. wages and rents should fall in Country A
B. wages and rents should rise in Country A
C. wages should rise and rents should fall in Country A
D. wages should fall and rents should raise in Country A - Externalities are a problem only if ?
A. decision makers do not take them into account
B. all firms are perfectly competitive
C. the externalities are negative
D. all firms are monopolistic - Externalities arise because there is a divergence between ________ and _________?
A. private costs, private benefits
B. private costs, social costs or benefits
C. social costs, social benefit
D. insiders, outsiders - According to the factor price equalization theorem, the ________ factor should oppose free. trade policies in any given country?
A. abundant
B. scarce
C. neither
D. can’t tell without more information - The Heckscher-Ohlin theorem states that a country will have comparative advantage in the good whose production in relatively intensive in the with which the country is relatively abundant ?
A. tastes
B. technology
C. factor/resource
D. opportunity cost - Which of the following is not considered a transaction cost incurred by parties in the process of contracting to eliminate a pollution externality ?
A. costs incurred due to lawyers’ fees
B. costs incurred to reduce the pollution
C. costs incurred to enforce the agreement
D. costs incurred due to a large number of parties affected by the externality
E. All of these answers are considered transaction costs - What is called when a private company first offers shares to the public market and investors ?
A. Public offering
B. Public floating
C. going public
D. Coming public
