Which of the following suggests that private markets can be effective in dealing with external costs and benefits?
A) external technology policy
B) the Coase theorem
C) the law of diminishing returns
D) the ―invisible hand‖

Question

Quizplus · Accepted Answer

The Coase theorem suggests that private parties can effectively negotiate and find a mutually beneficial solution to externalities without government intervention. This highlights the effectiveness of private markets in dealing with external costs and benefits. A, C, and D do not specifically address the role of private markets in dealing with externalities.

Which of the Following Suggests That Private Markets Can Be