QUESTION 1 Which of the following is a true statement about the Coase Theorem: a. if the Theorem's assumptions are satisfied, then an externality can be resolved no matter who has the property rights b. the Coase Theorem works because, for a firm that creates a negative externality, the lost profit from decreasing their output is less than the size of the external cost the firm imposes on others O c. the Coase Theorem is a private sector solution, not a public sector solution O d. the Coase Theorem would not be applicable in situations where the negotiating costs are high O e. all of the above QUESTION 2 1 poi Based on the conditions laid out in the Coase Theorem, which of the following would lead to the failure of the Coase Theorem to internalize an externality a high transaction costs associated with dealing with a large number of people affected by the externality (e g. high cost of coordinating decisionmaking) O b. the property rights associated with a specific resource belong to society O'c within a given market, a firm's production process causes the marginal cost of one firm to be less than the marginal cost to society O'd all of the above O e. both a and b are correctQUESTION 3 Assume that the production of a good is associated with positive externality. Which of the following statements involving the use of the Coase Theorem in this case would be correct: O a. the Coase Theorem would lead to a decrease in the output within this market O b. the Coase Theorem would lead to an increase in the output within this market O . the Coase Theorem would cause deadweight loss to arise within this market O d. the Coase Theorem would decrease, but not eliminate the deadweight loss within this market O e. the Coase Theorem would eliminate the existing deadweight loss within this market O'f. both a and c are correct O g. both b and d are correct Oth. both b and e are correct