Which of the following must be present to reach a private solution to an externality problem?
A) The total number of people, creators of the problem and those affected, must be relatively large to justify negotiating a solution.
B) The transactions costs to negotiate a solution must be relatively low.
C) The government must approve the solution for it to be a legal solution.
D) A majority of the parties affected by the externality must agree to a solution.
B
You might also like to view...
What leads to chronic deficits on U.S. current account?
a. declining value of the dollar and uncertainty about its future b. devaluation of the dollar c. imports being greater than exports year after year d. foreigners buying up U.S. assets in the U.S. year after year e. more exports and fewer imports year after year
A community has five voters who are interested in only one issue: the government's spending on local parks. If Andre would like the government to spend $12,000 on parks, Brandon prefers $7,000, Charlene prefers $4,000, Dennis prefers $2,000, and Ernie prefers $0, how much spending would a politician seeking to win the election select when running against one opponent?
a. $2,000 b. $4,000 c. $7,000 d. $12,000