In the long run, efficiency of the Coase Theorem depends on the ability of private bargaining to accommodate the costs of altering resource use as relative prices and opportunity costs change. True False
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In the long run, efficiency of the Coase Theorem depends on the ability of private bargaining to accommodate the costs of altering resource use as relative prices and
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- Coasian bargaining is easier when a large number of parties are involved. is it true or falseConsider a firm producing a single good with selling price p. The cost to produce q units is q2/2 1. What’s the optimal value of q for the shareholder? Now assume that a manager receives a compensation given by 5% of the profits plus a private benefit of 0.05q. 2. What value of q would the manager choose?There are a range of property rights regimes that are possible in agriculture. These range from a landowner who pays fixed wages to her farm worker and keeps all profits from working the land, all the way to a tenant who pays a fixed rental fee to the landowner and keeps all profits from working the land. Somewhere in the middle is a sharecropping arrangement where the landowner and tenant share the revenues from selling their crops (normally in equal proportion). Suppose the agricultural output of a plot of land depends on the inputs y of a landowner and the inputs x of a tenant. Output is given by Q = A[logx + logy] , where A = 10. The price received for the goods is p = 1, the cost of a unit of effort to the tenant is w = 1 and the cost to the landowner of a unit of her inputs is r = 2. Question:Suppose the landowner and the tenant share output in equal proportions. What will be the levels of x and y? What is total output?
- Under all other ideal conditions, changing which party receives property rights in a given dispute will affect the wealth distribution of the result. True FalseThe Coase theorem states that if property rights exist, the number of parties is small, and transactions costs are low, there will be no externalities regardless of who owns the property rights. Select one: True FalseWhat is an everyday example of distributive and integrative bargaining. -In your distributed bargaining example, what are the gains and losses. -In your integrative bargaining example, what is the mutual gains.
- A number of coal burning steam locomotives pass by several largely populated towns each day spewing sulfur dioxide. Each coal burning steam locomotive is owned by a different company. a. Explain how the Coase theorem could work to achieve the optimal level of sulfur dioxide emissions. Explain how the achievement of the optimal level of sulfur can be hindered in reality for this particular problem. b. Assume that the true marginal abatement cost curve for all firms is not known to a regulator. If the marginal damages from sulfur dioxide is fairly constant at all levels of sulfur dioxide levels, what is the better type of policy to implement, a quota or a tax on sulfur dioxide emissions? Give a brief explanation of why you have chosen that particular policy. Use a graph to support your explanation.The table below shows the total cost of producing different quantities of political magnets. What is the marginal cost of the second magnet? Multiple Choice : a) $7 b) $10 c) $21 d) $4Consider that there is one auctioneer who would like to sell one commodity and there are 2 individuals, 1 and 2. The auctioneer will apply the following tie-breaking rule: If there are multiple bidders who announce the highest bid, then select the bidder with the smallest index will be picked up as the winner. (For instance, let b(i) = b(j) . Then, i is the winner if and only if i < j.) Let each individual i's private value of the commodity, v(i), is given as: v(1) = $1600; v(2) = $2100. Considering a first-price auction, specify the set of Nash equilibria in this game.
- Demand for a good is given by Q = 100 - P. Assume that the market is perfectly competitive, so that the industry supply curve is equal to the private marginal cost of production: MC = 10 + Q. There is also a $10 per unit negative externality. What will the equilibrium quantity be if the firm only pays for its private costs, i.e. does not internalize the externality?The proposition that problems of externalities will be resolved efficiently through private exchange is known as Property rights Pollution abatement Coase theorem Tort lawSuppose that the inverse market demand curve for cloth is p = 150 - 2Q, the private marginal cost (unregulated competitive market supply) is = 75 + Q, and the private marginal damage from pollution is = 2Q. What is the unregulated competitive equilibrium quantity and price? What is the social marginal cost of production and social equilibrium quantity and price? What specific tax t (per unit) would result in the social optimum?
