If Private Bargaining to Resolve an Externality Is to Result

question 172

Multiple Choice

If private bargaining to resolve an externality is to result in an efficient outcome,

• A) rights must be protected by liability rules.
• B) there must be tradable pollution rights.
• C) there must be direct regulation of externalities.
• D) the initial assignment of rights must be clear to both parties.

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Definitions:

Myelination

The process of forming a myelin sheath around the nerves, which facilitates faster transmission of electrical signals in the nervous system.

Neural Pathways

Networks of neurons in the nervous system that transmit signals between different parts of the body, crucial for the functioning of the brain and body.

Cerebral Cortex

The outer layer of the brain, responsible for complex mental processes such as thinking, decision-making, and language.

Right Hemisphere

The half of the brain that is typically associated with spatial abilities, facial recognition, and processing of music and art.