Question

According to the Coase Theorem if a property right is well defined and transaction costs are low Multiple choice question. resources will gravitate to their highest-valued use. total surplus is not maximized. where the resources are used depends on who owns the property right. resources will gravitate to their lowest-valued use.

Answer 1

According to the Coase Theorem if a property right is well defined and transaction costs are low resources will gravitate to their highest-valued use.

Coase Theorem

According to the Coase Theorem if a property right is well defined and transaction costs are low resources will gravitate to their highest-valued use.

Hence for low transactions costs, resources will be used efficiently, regardless of the property rights. Also, when transactions costs are high, resources will be used efficiently depending on the initial property rights.

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