Which of the following statements about the Coase theorem is true?
A)Underlying the results of the Coase theorem is the idea that private parties can bargain without cost over the allocation of resources.
B)The Coase theorem asserts that private solutions to externalities invariably lead to inefficient allocations of resources.
C)The Coase theorem applies to negative externalities, but not to positive externalities.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The Coase theorem is based on the idea that private parties can negotiate without cost, leading to efficient resource allocation. Option B is incorrect as it contradicts the Coase theorem itself. Option C is incorrect as the Coase theorem can be applied to both positive and negative externalities.

Which of the Following Statements About the Coase Theorem Is