The Coase theorem says that when information is free:
A)there will be more externalities.
B)the allocation of resources is Pareto- optimal.
C)people will over consume information.
D)there will be more free riders.

Question

Quizplus · Accepted Answer

The Coase theorem states that when transaction costs are low and property rights are clearly defined, bargaining will lead to an efficient allocation of resources, known as Pareto-optimality. When information is free, it is assumed that transaction costs are low and bargaining can occur without much difficulty. Therefore, the allocation of resources should be Pareto-optimal. The other options (A, C, and D) are not necessarily true or related to the Coase theorem.

The Coase Theorem Says That When Information Is Free