The Coase theorem reminds us that efficiency is all about ____________________ and says nothing about ______________________.
A) maximizing total surplus; the distribution of that surplus
B) equitably distributing surplus; maximizing that surplus
C) who gets the most surplus; whether that's a fair outcome
D) None of these statements is true.

Question

Quizplus · Accepted Answer

The Coase theorem states that in the absence of transaction costs, individuals will always bargain to reach an efficient outcome regardless of the initial allocation of property rights. Therefore, the focus of the Coase theorem is on maximizing total surplus (or social welfare) and not on the distribution of that surplus.

The Coase Theorem Reminds Us That Efficiency Is All About