Consider the following characteristics: a. low transaction costs
B. small levels of pollution
C. high levels of pollution
D. clear assignment of property rights.
Which of the above are assumptions behind the Coase Theorem?

Question

Quizplus · Accepted Answer

The Coase Theorem assumes low transaction costs, clear assignment of property rights, and does not assume any specific level of pollution. While it is more likely to be applicable in cases of small levels of pollution, it can still be applied to cases of high pollution. Therefore, option B is incorrect. Option A is incorrect because it includes small levels of pollution which is not a specific assumption of the Coase Theorem. Option D is incorrect because although low transaction costs are an assumption, it is not the only assumption. Therefore, option C is the best choice.

Consider the Following Characteristics: A. Low Transaction Costs