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:

Adjacent Angle

Adjacent angles are two angles that have a common vertex and a common side but do not overlap, often found in geometric shapes and figures.

Hypotenuse

The side facing the right angle in a right-angled triangle, known for being the longest.

°

A symbol used to denote degrees in measures of angles, temperature, or quality.

Pythagorean Theorem

A theorem that states that the square of the sides of a right triangle are equal to the square of the hypotenuse.