USU-Intro To MacroEcon - Assignment 11

Firm b will buy a permit and emit one more ton of

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Unformatted text preview: ton 5. firm B will buy a permit and emit one more ton of gunk, while firm A will reduce its emissions of gunk by one ton Question 9 (1 point) In its simplest form, the Coase theorem states that 1. a private solution such as bargaining will never lead to efficiency, so government intervention is always necessary 2. bargaining can lead to an efficient solution only in the case of positive externalities 3. command regulation is the most efficient method of reducing the harm caused by negative externalities 4. governments should tax those externalities with the most inelastic demand 5. bargaining can lead to an efficient allocation of resources in the presence of negative externalities, as long as the transactions costs of bargaining are low Question 10 (1 point) The problem of common ownership arises due to 1. a lack of clearly defined property rig...
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