What Result Could Private Contracts Between Parties with Mutual Interests

question 147

Multiple Choice

What result could private contracts between parties with mutual interests lead to

• A)They can only reduce the well-being of society.
• B)They will always lead to market outcomes in which the public interest is sacrificed for personal gain.
• C)They can solve some inefficiencies associated with positive externalities.
• D)They will always cause negative externalities to arise.

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Definitions:

Marginal Costs

The boost in total charges incurred by producing one more unit of a product or service.

Rational Self-interest

Acting in a way that is most beneficial to oneself, based on logical and reasoned decision-making.

Utility

In economics, the satisfaction or benefit derived from consuming a product or service.

Opportunities

Circumstances that make it possible to do something, often leading to new ventures or investments in economics.