When diminishing marginal returns set in, total product
a. is negative
b. decreases at an increasing rate
c. decreases at a decreasing rate
d. increases at an increasing rate
e. increases at a decreasing rate
E
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Suppose pollution, which generates a negative externality, exists in a market. If transactions costs are low and parties are willing to bargain, then, according to the Coase theorem,
A) an equitable solution can only be reached if property rights are assigned to the victims of pollution and not the polluters. B) an equitable solution can only be reached if property rights are assigned to the polluters, and not the victims of pollution. C) an efficient solution can be reached regardless of the initial assignment of property rights. D) government intervention is necessary to reach an efficient and equitable solution.
Market income is defined as wages, interest, rent, and profit earned in factor markets plus cash payments to households by the government
Indicate whether the statement is true or false