The Coase theorem states that if private parties can negotiate the purchase and sale of the right to perform activities that cause externalities, then they:
A)can always arrive at efficient solutions to the problems caused by externalities.
B)will never arrive at efficient solutions to the problems caused by externalities.
C)will never perform activities that generate negative externalities.
D)will always perform activities that generate positive externalities.

Question

Quizplus · Accepted Answer

The Coase theorem states that if at no cost people can negotiate the purchase and sale of the right to perform activities that cause externalities, they can always arrive at efficient solutions to the problems caused by externalities.

The Coase Theorem States That If Private Parties Can Negotiate