Question

A vertical transaction is one concluded by subordinates at the same level of the administrative structure without the approval of administrative superiors. True False

The proponents of industrial policy argue that private markets can effectively produce growth True False

According to the textbook, income distribution under capitalist economic system tends to be unequal in the absence of state action. True False

Ronald Coase has argued that external effects can be corrected by

antitrust legislation.

having the government set price equal to marginal cost.

voluntary agreements taxation.

taxation.

Answer 1

1. False

A horizontal transaction is one concluded by subordinates at the same level of the administrative structure without the approval of administrative superiors.

2. False

The proponents of industrial policy argue that private markets cannot effectively produce growth.

3. True

4. c. voluntary agreements.

According to the Coase theorem, in the case of externalities, private citizens or firms are able to negotiate a mutually beneficial, socially desirable solution as long as there are no costs associated with the negotiation process.