If Only a Few People Are Affected by an Externality

question 493

Multiple Choice

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

• A)the government will play a role in collective action.
• 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.

---

Definitions:

Intensity

The degree of strength, force, or energy with which an action is executed or a characteristic is manifested.

Cross-Cultural Values

Beliefs or priorities that vary among different cultures, affecting behavior, practices, and perceptions.

Power Distance

A cultural dimension that describes the extent to which less powerful members of organizations and institutions accept and expect power to be distributed unequally.

Ethical Sensitivity

The capability to recognize and respond to ethical issues and dilemmas that arise in various situations.