If Two Parties Negotiating a Private Solution to an Externality

question 16

Multiple Choice

If two parties negotiating a private solution to an externality cost employ a lawyer to help draft the contract, the lawyer's costs are a type of:

• A)transport cost
• B)legal cost
• C)negative consumption externality
• D)a transaction cost

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Definitions:

Multiple Accounts

Refers to having more than one account, often in financial or online contexts, to manage different aspects.

Disbursement Float

The time delay between when a check is written and when it is actually deducted from the payer's account.

Available Balance

The funds in a bank account that are accessible for withdrawal or use, accounting for any pending transactions.

Book Balance

The amount of money on the books or recorded in the financial statements, differing from the actual cash balance due to outstanding checks or deposits in transit.