Two Parties Fail to Solve an Externality Problem Because Reaching

question 124

Multiple Choice

Two parties fail to solve an externality problem because reaching an agreement requires high-priced lawyers to negotiate and write up contracts. This illustrates the problem of:

• A) Pigouvian legal fees.
• B) transaction costs.
• C) legal inefficiency.
• D) punitive-cost agreements.

---

Definitions:

Psychotherapy

A therapeutic treatment primarily involving talking, aimed at addressing mental health issues and improving wellbeing.

Group Therapy

is a form of psychotherapy in which a therapist works with a group of patients simultaneously, leveraging group dynamics to foster healing and personal growth.

Person-centered Therapist

A therapist who practices a form of psychotherapy that emphasizes the client's self-discovery and actualization, and involves creating a non-judgmental, empathic, and accepting therapy environment, as developed by Carl Rogers.

Transference

In psychotherapy, the process by which emotions originally associated with one person, typically from early life, are unconsciously shifted onto the therapist.