Voluntary Agreements May Not Be a Feasible Method to Internalize

question 121

Multiple Choice

Voluntary agreements may not be a feasible method to internalize an externality when

• A) the dollar value of the externality is large.
• B) the externality is negative rather than positive.
• C) there are significant transaction costs.
• D) there are high taxes on the firms that cause the externalities.

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Definitions:

Forelimb

The front limbs of an animal that in humans refer to the arms, including structures from the shoulder to the fingers.

Saphenous Vein

A large vein running along the length of the leg, commonly used for grafts in coronary artery bypass surgery.

Brachiocephalic Vein

A large vein in the upper chest that transports deoxygenated blood from the upper limbs, neck, and head to the heart.

External Jugular Vein

A vein located on the outside of the sternocleidomastoid muscle, draining blood from the face, neck, and scalp into the subclavian vein.