If Only a Few People Are Affected by an Externality

question 306

Multiple Choice

If only a few people are affected by an externality, then it is likely that

• A) corrective taxes will provide the most efficient solution to the externality.
• B) command-and-control regulation will provide the most efficient solution to the externality.
• C) a private solution to the inefficiency will occur.
• D) a private solution will be very difficult to negotiate.

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Definitions:

New-product Development

The process of bringing a new product to the market, including ideation, design, development, and launch.

Business Analysis

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Marketing Strategy

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Estimates of future financial performance, including expected revenue, expenses, and profitability.