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Author Question: Coase made famous a court case between a doctor and a confectioner. Suppose that exact case happened ... (Read 72 times)

Metfan725

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on: Jul 1, 2018
Coase made famous a court case between a doctor and a confectioner. Suppose that exact case happened again and transactions costs were absent. When would we be sure that resources were inefficiently allocated?
 
  a. If the confectioner wins the property right to make his confections.
  b. If the doctor wins the right to prevent the confectioner from making his confections.
  c. Zoning laws are changed to prevent the confectioner from manufacturing in the current location.
   d. The judge forces the parties to bargain until they reach an agreement on who has a right to do what.

Question 2

A firm operating with diminishing total returns cannot be profit maximizing.
 
  What will be an ideal response?


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deja

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Reply #1 on: Jul 1, 2018
Answer to Question 1

c

Answer to Question 2

True. This firm could produce more output with fewer inputs. This cannot be profit maximizing.


Metfan725

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Reply 2 on: Jul 1, 2018
YES! Correct, THANKS for helping me on my review

emsimon14

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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