Author Question: Ronald Coase is famous for the Coase Theorem, which is based on the premise that there is an ... (Read 114 times)

karateprodigy · **on:** Jun 29, 2018

Ronald Coase is famous for the Coase Theorem, which is based on the premise that there is an economically efficient level of pollution reduction.

Many economists believe that the tradable emissions allowance program that has been used to deal with the problem of acid rain has been successful in reducing emissions of sulfur dioxide in an economically efficient manner. Why isn't this program an example of the Coase Theorem?

Question 2

Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 10,000 units

A) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low.
B) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low.
C) producers should lower the price to 1 in order to sell the quantity demanded of 10,000.
D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high.

morganmarie791 · **Reply #1 on:** Jun 29, 2018

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