Which is largest in an advanced economy like the U.S.?

Marginal cost is the

A) cost of an increase in an activity. B) total cost of an activity. C) cost of an activity minus the benefits of the activity. D) cost of all forgone alternatives.

Which of the following will lead to an efficient private solution if negative externalities are present in a market?

A) The party having the legal right is taxed. B) The party creating the externality has the legal property right. C) The party suffering from the externality has the legal property right. D) The parties involved negotiate with each other and reach an agreement.