Externalities Between Two Firms Can Be "Internalized" If

question 33

Multiple Choice

Externalities between two firms can be "internalized" if:
I.The two firms merge.
II.Bargaining costs are zero.
III.The externalities affect each firm equally.
IV.Marginal costs for both firms are constant.
Which statement(s) correctly complete(s) the sentence?

• A) Only II.
• B) All except III.
• C) I and II, but not III and IV.
• D) I and IV, but not II and III.

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Definitions:

Open Circulatory System

A type of circulatory system found in some invertebrates where blood flows freely in the body cavity, bathing organs directly in blood.

Polyp

A hydralike animal; the sessile stage of the life cycle of certain cnidarians. Compare with medusa.

Stinging Cell

A Stinging Cell, or cnidocyte, is a specialized cell found in the tentacles of jellyfish and other cnidarians used for prey capture and defense by discharging a toxic substance.

Radula

A unique, toothed structure found in mollusks, used for scraping or cutting food before ingestion.