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.

---

Definitions:

Currency Risk

The potential for financial loss due to fluctuations in foreign exchange rates affecting investments or business operations involving different currencies.

Foreign Currencies

Currencies used in countries other than one's own, involved in international trade and finance transactions.

Labour Content

The total amount of work or labor hours required to complete a unit of production.

Shift

A work period in a day during which an employee is scheduled to work, typically characterized by its start time, such as day shift or night shift.