What is the Coase Theorem? What are transaction costs?
The Coase Theorem asserts that if the benefits are greater than the costs for some course of action, there must be potential transactions that can make some people better off without making anyone worse off. For this to result property rights must be well-defined and transaction costs must be low. Transaction costs are the costs of negotiating and executing an exchange, excluding the cost of the good or service bought.
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Refer to the figure above. What is the revenue of the firm when it sells the profit-maximizing level of output?
A) $40 B) $160 C) $180 D) $240
When is a balance of payments account out of balance?
a. only when exports are greater than imports b. only when imports are greater than exports c. when exports are either greater or less than imports d. only when exports are greater or less than imports over a sustained period e. never