Author Question: Explain the Coase theorem. In order for the Coase theorem to be applicable, explain which three ... (Read 119 times)

ENagel · **on:** Jun 29, 2018

Explain the Coase theorem. In order for the Coase theorem to be applicable, explain which three conditions must be satisfied. Give an example to show how the Coase theorem can be applied.

What will be an ideal response?

Question 2

On Friday May 3, 2013, the headlines in the list appeared in The Wall Street Journal. Classify each headline as a signal that the news article is about a microeconomic topic or a macroeconomic topic. Explain your answers.

What will be an ideal response?

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

Answer to Question 1

The Coase theorem is the idea that when externalities are present, private parties can arrive at the efficient solution without government involvement under certain conditions. These three conditions are: basic rights must be clearly understood, there must be no impediments to bargaining, and only a few people can be involved. Answers will vary about applications of the Coase theorem.

Answer to Question 2

Job Gains Calm Slump Worries
This entry is a macroeconomic topic because the slump concerns a turndown in the overall economy and neither an individual nor a busi-ness makes the decision to slow the aggregate economy.
Washington Post's Profit Falls
This entry is a microeconomic topic because it concerns the profit out-come of one business, the Washington Post.
Overcapacity, Fuel Costs Hit Shipping
This entry is a microeconomic topic. It describes the situation within one sectorshippingwhich is being affected by overcapacity and a rise in the price of fuel.
Green Shoots in Greece?
This entry is a macroeconomic topic because the green shoots mean that growth in different sectors is starting to grow. It is a sign that per-haps the overall Greek economy is starting to grow.