Which of the following suggests that the private market can be effective in dealing with externalities?
A)the 'invisible hand'
B)the law of diminishing social returns
C)the Coase theorem
D)technology policy

Question

Quizplus · Accepted Answer

The Coase theorem suggests that private market forces can resolve externalities without government intervention, through negotiation and voluntary agreements between affected parties. This is a demonstration of the effectiveness of the private market in dealing with externalities. The other choices are not directly related to the effectiveness of the private market in dealing with externalities.

Which of the Following Suggests That the Private Market Can