The coase theorem states that
a. if transaction costs are low, private deals will create externalities and result in inefficient outcomes.
b. if transaction costs are low, private bargaining will result in an efficient solution to the problem of externalities.
c. if transaction costs are low, private markets will create externalities and result in efficient outcomes.
d. if transaction costs are low, the government will regulate an efficient solution to the problem of externalities.
e. if imposed on free markets, government regulations will result in inefficient outcomes and create deadweight loss.

1. in recent lessons, you have been reading about some of the challenges and issues that the united states faces in both foreign and domestic affairs. review your notes from chapters 39–41 and make a list of these issues. make sure you review the looking to the future and charting future courses sheets from the divisions and new realities lessons. of all the challenges and issues that the united states faces, which do you believe is the most serious in terms of foreign affairs and which in terms of domestic affairs? choose one of each and write an essay that describes each issue and explains why you believe it is the most serious. there is no right or wrong answer—you will be graded, in part, on how well you make the argument that each issue you chose is the most serious. refer to the rubric and scoring instructions on the next page to see how your teacher will grade this assignment.