If Only a Few People Are Affected by an Externality

question 15

Multiple Choice

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

• A)Pigovian 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:

Assertiveness

The quality of being self-assured and confident without being aggressive.

Bargaining

A negotiation process between two or more parties aimed at reaching a mutually beneficial agreement or resolving a dispute.

Ingratiation

A social influence strategy aimed at making oneself more likable or acceptable by flattering or praising others.

Meeting Starts

The initiation or commencement of a gathering designed for discussion, decision-making, or collaboration among participants.