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erica [24]
3 years ago
13

Describe an example of a problem that could be solved using the Coase theorem. Do this by defining a hypothetical situation wher

e one individual is causing a negative externality on another individual. Describe whether it matters who holds property rights. Define the three necessary conditions for Coase theorem to work completely. Describe why a failure of these conditions will likely cause Coasian bargaining to fail.
Business
1 answer:
wariber [46]3 years ago
3 0

Answer:

Explanation:

Theorem Utilization: Coase Theorem has been created to take care of the issue of market disappointment. Market disappointment exists where value component doesn't convey productive outcome.  

Example : For instance, dairy cattle of Rancher wandered into close to field. this is a sort of negative externalities. On the off chance that property right is given to rancher, at that point he can sue Rancher for making harm crop. Yet, there is no privilege to rancher, it suggests that privilege has been given to farmer. Presently here rancher will attempt to repay Rancher to lessen the size of his cows group.  

Three necessary conditions:

  1. The rights of property should be well defined.
  2. The rights of property should be transferable.
  3. The cost of transaction must be sufficiently small.

It doesn't make a difference whom property right is given, there will be effective results. Coase hypothesis bombs where haggling cost rises or free rider issues are seen.

You might be interested in
The higher the degree of financial leverage employed by a firm is, the: A. Higher is the number of outstanding shares of stock.
horsena [70]

Answer:

Option B,

The higher the degree of financial leverage employed by a firm, THE HIGHER THE PROBABILITY THAT THE FIRM WILL ENCOUNTER FINANCIAL DISTRESS.

Explanation:

The degree of financial leverage (DFL) is a leverage ratio that measures the sensitivity of a company's earnings per share to fluctuations in it's operating income, as a result of changes in its capital structure.

This ratio indicates that the higher the degree of financial leverage, the more volatile earnings will be.

The use of financial leverage varies greatly by industry and by the business sector. There are many industry sectors in which companies operate with a high degree of financial leverage (examples are retail stores, grocery store, banking institutions, airlines...). Unfortunately, the excessive use of financial leverage by many companies in this sector has played a major role in forcing a lot of them to file for bankruptcy.

Therefore, if the degree of financial leverage employed by a firm is high, then the probability that the firm will encounter financial distress will also be high.

3 0
3 years ago
Corporation has two manufacturing departments--Casting and Customizing. The company used the following data at the beginning of
Pavel [41]

Answer:

Allocated overhead= $37,260

Explanation:

Giving the following information:

Total

Estimated total machine-hours (MHs) 10,000

Estimated total fixed manufacturing overhead cost $38,000

Estimated variable manufacturing overhead cost per machine-hour $4.3

<u>First, we need to calculate the plantwide predetermined overhead rate:</u>

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (38,000/10,000) + 4.3

Predetermined manufacturing overhead rate= $8.1 per machine-hour

<u>Now, we can allocate overhead to Job G:</u>

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Job G

Casting machine-hours 1,600

Customizing machine-hours  3,000

Allocated overhead= 8.1* (1,600 + 3,000)= $37,260

6 0
3 years ago
In an effort to save money for early retirement, an environmental engineering colleague plans to deposit $1,700 per month, start
Ksju [112]

Answer:

$268,696.93

Explanation:

Where an equal amount of money is saved periodically to earn interest at a particular rate of interest to accumulate a target amount in the future , it is called a sinking fund. The purpose could be for retirement, loan repayment or asset acquisition

The sum accumulated (deposit plus interest earned) at the end of the final period is known as the Future Value (FV) of the sinking fund.

The FV is determined as follows:

FV = A × ((1+r/m)^(n× m) - 1)/(r/m))

where FV- future value, A- annual cash flow, r-rate of return, n- number of years, m- number of compounding periods in a year.

<em>so we can apply  this to our question</em>

a = 1700, r - 8%= 0.08, m=4, n- 18

FV = 1,700 ×( (1+0.08/4)^(18 × 4) - 1)/(0.08/4))

     = 1700  × 158.0570

     =$268,696.93

The account will have $268,696.93 at he end of he 18 years

5 0
3 years ago
Air Destinations issues bonds due in 10 years with a stated interest rate of 11% and a face value of $500,000. Interest payments
olga nikolaevna [1]

Answer: $471,324.61

Explanation:

Price of a bond = Present value of coupon payments + Present value of face value at maturity

Coupon payments = 500,000 * 11% * 1/2 years = $27,500

Periodic yield = 12%/ 2 = 6% per semi annual period

Periods = 10 * 2 = 20 semi annual periods

Coupon payment is constant so it is an annuity.

Price of bond = Present value of annuity + Present value of face value at maturity

= (Annuity * Present value interest factor of Annuity, 6%, 20 years) + Face value / (1 + rate) ^ number of periods

= (27,500 * 11.4699) + 500,000 / (1 + 6%)²⁰

= $471,324.61

8 0
2 years ago
The following transactions occur for Badger Biking Company during the month of June: a. Provide services to customers on account
a_sh-v [17]

Answer:

See below

Explanation:

Assets =

Liabilities + Stockholder's equity

Accounts receivables $34,000(+)

Revenue $34,000(+)

Cash $26,000(+)

Accounts receivables $26,000(-)

Bike equipment $19,000(+) Notes payable $19,000(+)

Cash $3,400(-)

Retained earnings $3,400(-)

The first transaction increases asset(account receivable) by $34,000 while revenue(stockholder's equity) increased by the same amount

The cash receipt of $26,000 increases assets cash by $26,000 and decreases an asset , account receivable by the same amount

The purchase of an asset by note payable increases asset, bike equipment by $19,000 while liabilities note payable also increases by $19,000

The payment of utilities for $3,400 decreases asset cash by $3,400 while stockholder's equity retained earnings decreases by same amount.

7 0
3 years ago
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