Question: Explain the following theories:
A. What is the Coase Theorem, and when is it likely to be helpful in leading a market with externalities to provide the socially efficient level of output?
B. In the theory of consumer choice; explain the difference between an interior optimum and a corner point optimum.
C. What is Walras' Law? What is its significance?
D. In the theory of cost minimization, we learned that, an increase in the price of an input will never lead to an increase in the quantity of the input used. Explain why there cannot be "Giffen inputs."
E. Does economic theory require that a demand curve always be downward sloping? If not, under what circumstances might the demand curve have an upward slope over some region of prices?