According to Ronald Coase,allocation of resources in a free-market economy will be efficient as long as
A)property rights are clearly assigned but not enforced.
B)contracting costs are sufficiently high.
C)property rights are clearly assigned and can be enforced with low contracting costs.
D)property rights are assigned only to the rich.

Question

Quizplus · Accepted Answer

According to Ronald Coase, allocation of resources in a free-market economy will be efficient if property rights are clearly assigned and can be enforced with low contracting costs. This is because when property rights are clearly assigned, individuals can make decisions based on their own self-interest, leading to efficient resource allocation. Additionally, low contracting costs help facilitate transactions between parties, allowing for efficient allocation of resources. Contrarily, if contracting costs are high, it would become difficult for individuals to trade and coordinate, leading to inefficient resource allocation.

According to Ronald Coase,allocation of Resources in a Free-Market Economy