The Coase theorem suggests that private bargaining can solve externality problems if: MCQ with Answer and Explanation

Question

Share Report Error

The Coase theorem suggests that private bargaining can solve externality problems if:

A. transaction costs are high and property rights are unclear

B. the market is monopolized

C. the government imposes taxes

D. transaction costs are low and property rights are clearly defined

Answer: Option D

Solution (By JKSSB Mock Tests)

The Coase theorem states that with low transaction costs and clearly defined property rights, private parties can resolve externalities.

This question belongs to: Economy GK Economy Set 1

Request complete Subject PDF

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Economy Set 1 Questions

Question #1

The sacrifice ratio measures:

A. the cost of unemployment in terms of inflation

B. the ratio of exports to imports

C. the cost of inflation in terms of lost output

D. the ratio of tax revenue to GDP

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option C

Explanation:
The sacrifice ratio is the cumulative output loss required to reduce inflation by one percentage point.

This question belongs to: Economy GK Economy Set 1

Question #2

Fixed costs are costs that:

A. remain constant irrespective of output in the short run

B. equal variable costs

C. are zero in the long run

D. vary directly with output

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
Fixed costs do not change with the level of output in the short run.

This question belongs to: Economy GK Economy Set 1

Question #3

If the reserve ratio is 10%, the simple deposit/money multiplier is:

A. 10

B. 20

C. 5

D. 100

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
Money multiplier = 1/reserve ratio = 1/0.10 = 10.

This question belongs to: Economy GK Economy Set 1

Explore All Economy Set 1 MCQs