Asked by Tyler Thompson on Jul 28, 2024
Verified
The Coase theorem will ________ if the number of people involved is small.
A) only apply
B) rarely apply
C) always apply
D) never apply
Coase Theorem
An economic theory proposing that under conditions of no transaction costs, parties can negotiate and arrive at efficient resource allocation and solution to externalities regardless of initial property rights allocation.
Number Of People
A quantitative measure of the people involved or affected in a particular context.
- Understand the basic concept and conditions necessary for the Coase theorem to apply in resolving externalities.
Verified Answer
SA
Syazwani AzyanJul 28, 2024
Final Answer :
A
Explanation :
The Coase theorem is more likely to apply when the number of people involved is small because transaction costs are lower, making it easier for parties to negotiate and reach an agreement on the allocation of resources or rights.
Learning Objectives
- Understand the basic concept and conditions necessary for the Coase theorem to apply in resolving externalities.
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