Which of the following statements is consistent with the Coase theorem?
A. In the case of zero transaction costs, a property rights assignment (made by a court) will be undone if it benefits the relevant parties to undo it.
B. In the case of zero transaction costs, the resource allocative outcome will be the same no matter who is assigned the property right.
C. Taxes can do what property rights assignments cannot.
D. The market can solve all negative externality problems.
E. a and b
Answer: E
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A recent survey by India's central bank reported that spending plans by firms on large new projects fell by 46 percent in the year ending March 2012, compared with the prior year. This decrease will most directly impact
A) physical capital growth. B) human capital growth. C) technological change. D) population growth.
Bud opened a flower shop. He rented a building for $9,000 a year. To buy equipment for the store, he withdrew $10,000 from his savings account, which earned an annual interest rate of 3 percent
During the first year of operation, Bud paid $4,000 for utilities and $12,000 to his suppliers. The store's total annual revenue was $55,000. The market value of the store's equipment at the end of the year was $8,000. If Bud had not started this business, he would have continued to work as an employee at another flower shop for $30,000 a year. During the first year of operation, Bud A) received an economic profit of $30,000. B) received an economic profit of $20,000. C) incurred an economic loss of $2,300 D) incurred an economic loss of $12,300