The law of supply says that

Indiana's health care plan for state employees:

A. has reduced total spending on health care, but at the cost of employees forgoing important preventative care procedures. B. has reduced total spending on health care without people forgoing important preventative care procedures. C. has increased total spending on health care, but with the benefit of increasing the overall health of state workers who now take greater advantage of preventative care procedures. D. has reduced health care spending for those who participate in the plan, but only a small (less than 10 percent) percentage of state employees actually use the system.

Knowing that the presence of externalities reduces surplus, it implies that:

A. there are mutually beneficial trades waiting to be exploited so private parties have an incentive to solve the externality problem themselves. B. government needs to find them and correct the market. C. there are mutually beneficial trades waiting to be exploited, so government has an incentive to force those parties to solve the problem themselves. D. None of these statements is true.