Question

In which of the following cases is the Coase theorem most likely to solve the externality?
a. Ed is allergic to his roommate's cat.
b. Polluted water runoff from farms is making residents of a nearby town sick.
c. Chemicals from manufacturing plants in the Midwest are causing acid rain in Canada.
d. Industrialization around the world is causing global warming.

Answer 1

Answer:

a. Ed is allergic to his roommate's cat.

Explanation:

In the case of coase theorem the economic conditions in which there is a conflict of proerty rights and the parties that are involved could bargain or negotiate the terms so this will correctly to be shown the complete cost also the values related to the property rights at issue that could result in the effecient outcome or result

So as per the given situation, the option a is correct