Question

Given below are two statements, one is labelled as Assertion (A) and the other is labelled as Reason (R):
Assertion (A): Coase theorem states that as long as property rights are defined and enforced, bargaining between parties can ensure an efficient outcome in the presence of externalities.
Reason (R) : The assignment of property rights with bargaining among parties can resolve externality problems, when the number of parties involved is large.
In the light of the above statements, choose the most appropriate answer from the options given below:

• A. Both (A) and (R) are correct and (R) is the correct explanation of (A)
• B. Both (A) and (R) are correct but (R) is not the correct explanation of (A)
• C. (A) is correct but (R) is not correct
• D. (A) is not correct but (R) is correct

Answer 1

Answer: (C)

(A) is correct but (R) is not correct

Answer 2

The correct answer is (C) : (A) is correct but (R) is not correct.