Q
According to the Coase theorem, private parties can solve the problem of externalities if ?
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A
A. There are no transaction costs.
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B
B. Each affected party has equal power in the negotiations.
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C
C. The party affected by the externality has the initial property right to be left alone.
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D
D. There are a large number of affected parties.
Correct Answer:
A. A. There are no transaction costs.
