Multiple Choice Quiz

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1		Which of the following is not a way of dealing with externalities?
			A)	Internalization.
			B)	Raising taxes.
			C)	Increasing competition.
			D)	Creating an additional market.
2		Coase (1960) suggests dealing with externalities by creating a market for
			A)	income rights.
			B)	decision rights.
			C)	coordination.
			D)	externalities.
3		The Coase theorem specifies assumptions regarding
			A)	property rights and the efficiency of bargaining.
			B)	the efficiency of bargaining and Pareto efficiency.
			C)	property rights and wealth effect.
			D)	wealth effect and Pareto efficiency.
4		If the assumptions of the Coase theorem are satisfied, then
			A)	the externality problem is resolved.
			B)	the assignment of property rights does not matter for efficiency.
			C)	there are no coordination and motivation problems.
			D)	there is no role for the government.
5		Ownership rights are distinguished in
			A)	implementable and tradable rights.
			B)	enforceable and equitable rights.
			C)	externalities and coordination.
			D)	income and decision rights.
6		Decision rights are all rights that
			A)	concern the authority of the trader.
			B)	involve the use of an asset.
			C)	are determined in equilibrium.
			D)	assign costs and benefits regarding an asset.
7		An efficient ownership structure
			A)	maximizes consumer and producer surplus.
			B)	ensures a fair share for all parties involved.
			C)	is associated with market exchange.
			D)	frequently requires the intermediation of a third party.
8		The efficient allocation of ownership rights ensures that the price decision is
			A)	taken together.
			B)	determined by demand and supply.
			C)	assigned to the party with the superior information.
			D)	allocated by the Walrasian auctioneer.
9		Exchange in a situation with asymmetric information will only occur when the
			A)	involved parties are willing to come to an agreement.
			B)	coordination problem is neglible.
			C)	surplus involved is large enough.
			D)	involved parties meet frequently.
10		Which of the following is not a possible problem regarding property rights?
			A)	Allocation.
			B)	Surplus.
			C)	Enforcement.
			D)	Tradability.