false 4 question An external benefit created by a transaction is any benefit tha
ID: 1157819 • Letter: F
Question
false
4 question
An external benefit created by a transaction is any benefit that accrues to a party outside that transaction. true false
(16) The internalization of a negative externality from a particular production process will cause the market demand curve to shift to the right. the market demand curve to shift to the left. the market demand curve to stay the same. There is not enough information to answer the question.
(17) The Coase Theorem suggests that people want to cooperate. people working in their own best interest can privately negotiate to solve an externality. people will not respond to incentives. government intervention is necessary to deal with externalities.
(18) Free markets create maximum economic value at the output at which supply and demand curves intersect. true
false
Explanation / Answer
15. TRUE
The definition stated is correct.
16.the market demand curve to stay the same.
It wil rather affect the supply curve and not market demand.
17.people working in their own best interest can privately negotiate to solve an externality.
If property rights are well defined then people will work together to solve the problem of negative externality
18. TRUE
In other words, there is no deadweight loss - i.e. all the surplus in the market is either claimed by the consumer or the supplier.
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