A coase solution to a problem of externality ensures that a socially efficient outcome is to maximize the joint welfare, irrespective of the right of ownership.
Explanation:
In law and in economics the Coase theorem explains the economic efficiencies in the existence of externalities. The economic efficiency of economic allocation or outcome. In practice, barriers to negotiation or poorly defined rights of property can prevent coasean negotiations.
The private external solutions include, for the benefit of the relevant parties, moral codes, charities and business fusions and contracts. In the theorem, two parties can bargain and obtain an optimal outcome in the presence of an externality when transaction cost is low.
Answer:
value of the firm = 21.20 million
value of the firm = 20.80 million
Explanation:
given data
current profits = $400,000
annual rate = 4 percent
opportunity cost = 6 percent
solution
we get here value of the firm before pays out current profits as dividend is express as
value of the firm = current profits ( 1+opportunity cost ) ÷ ( opportunity cost - annual rate ) ................1
put here value
value of the firm =
value of the firm = 21.20 million
and
value of the firm after pays is
value of the firm = current profits ( 1+annual rate ) ÷ ( opportunity cost - annual rate ) ................2
value of the firm =
value of the firm = 20.80 million
Explanation:
No matter how bold or ambitious your plans are to grow your business, the key to your business's success lies in three critical, interdependent components: operational excellence, customer relations/communications and financial management.
Answer: option C. side-effect
Externality is an economic term, used to refer the damage or benefit that an individual or community experience, due to the activity of other agents who are pursuing other objective.
For example, when a enterprise burns fuel to produce energy, the increase of CO2 is an externality.