21.Inclassactionlawsuitsinterestedpartiestothelawsuitarenotrequiredtopayattorneyfeesdirectly.Thisisanexampleofanattemptto
a.maximizeattorneyfees.
b.reducetheincentiveofattorneystofileclassactionlawsuits.
c.reducethetransactioncostsoffindingaprivatesolutiontoanexternality.
d.regulateattorneyfees.
22.Deelovestolandscapeheryard,butherneighborMarvinplacesalowvalueonhislandscaping.WhenMarvin’sgrassisneglectedandgetslong,DeewillmowitforMarvin.Thisisanexampleof
a.asituationinwhichtheCoasetheoremfailstoexplainthelawnmowingarrangement.
b.animproperallocationofresources.
c.aprivatesolutiontoanegativeexternalityproblem.
d.anexploitationofacommonresource.
23.TheCoasetheoremsuggeststhatprivatesolutionstoanexternalityproblem
a.areeffectiveunderallconditions.
b.willusuallyallocateresourcesefficientlyifprivatepartiescanbargainwithoutcost.
c.areonlyefficientwhentherearenegativeexternalities.
d.maynotbepossiblebecauseofthedistributionofpropertyrights.
24.InwhichofthefollowingcasesistheCoasetheoremmostlikelytosolvetheexternality?
a.Edisallergictohisroommate’scat.
b.ChemicalsfrommanufacturingplantsintheMidwestarecausingacidraininCanada.
c.Pollutedwaterrunofffromfarmsismakingresidentsofanearbytownsick.
d.Industrializationaroundtheworldiscausingglobalwarming.
25.AccordingtotheCoasetheorem,privatepartiescansolvetheproblemofexternalitiesif
a.thecostofbargainingissmall.
b.theinitialdistributionoflegalrightsfavorsthepersonbeingadverselyaffectedbytheexternality.
c.thenumberofpartiesinvolvedissufficientlylarge.
d.Alloftheabovearecorrect.
26.AccordingtotheCoasetheorem,privatemarketswillsolveexternalityproblemsandallocateresourcesefficientlyaslongas
a.theexternalitiesthatarepresentarepositive,notnegative.
b.governmentassignspropertyrightstotheharmedparty.
c.privatepartiescanbargainwithsufficientlylowtransactioncosts.
d.businessesdetermineanappropriatelevelofproduction.
27.TheCoasetheoremstatesthat
a.undercertaincircumstancesgovernmentinterventionisnotneededtoreachefficientoutcomeswhenanexternalityispresent.
b.governmentinterventionisalwaysrequiredtoreachanefficientoutcomewhenanexternalityispresent.
c.governmentinterventioncannotleadtoanefficientoutcomewhenanexternalityispresent.
d.onlynegativeexternalitiescanberesolvedusinggovernmentintervention.
28.WhichofthefollowingisnotanecessaryconditionfortheCoasetheorem?
a.Propertyrightsareclearlydefined.
b.Therearenobargainingcosts.
c.Thegovernmentintervenestointernalizetheexternality.
d.Thereareonlyafewpartiesinvolved.
29.InmanycasestheCoasetheoremdoesnotworkwellbecause
a.therearetoofewpartiesatthenegotiationtable.
b.thegovernmentdoesnotknowabouttheCoasetheorem.
c.transactioncostsaretoohigh.
d.transactioncostsaretoolow.
30.Whycan’tprivateindividualsalwaysinternalizeanexternalitywithoutthehelpofgovernment?
a.Legalrestrictionspreventsidepaymentsbetweenindividuals.
b.Transactionscostsmaybetoohigh.
c.Sidepaymentsbetweenindividualsareinefficient.
d.Sidepaymentsbetweenindividualsareinsufficient.
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