Mcqs Clouds
mcqsclouds.com

According to the Coase theorem, private parties can solve the problem of externalities if ?

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 Questions on Externality & Internality Mcqs

Tradable pollution permits ?

A. reduce the incentive for technological innovations to further reduce pollution.

B. set the price of pollution.

C. determine the demand for pollution rights.

D. Set the quantity of pollution

Roberto and Thomas live in a university hall of residence. Reberto values playing loud music at a value of €100. Thomas values peace and quiet at a value of €150. Which of the following statements is true about an efficient solution to this externality problem if Roberto has the right to play loud music and if there are no transaction costs ?

A. Thomas will pay Roberto between €100 and €150 and Roberto will continue to play loud music

B. Roberto will pay Thomas €150 and Roberto will continue to play loud music

C. Thomas will pay Roberto between €100 and €150 and Roberto will stop playing loud music

D. Roberto will pay Thomas €100 and Roberto will stop playing loud music