Which of the Following Must Be Present to Reach a Private

question 78

Multiple Choice

Which of the following must be present to reach a private solution to an externality problem?

• A)A majority of the parties affected by the externality must agree to a solution.
• B)The transactions costs to negotiate a solution must be relatively low.
• C)The total number of people, creators of the problem and those affected, must be relatively large to justify negotiating a solution.
• D)The government must approve the solution for it to be a legal solution.

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Definitions:

Capital Goods

Are tangible assets such as buildings, machinery, equipment, vehicles, and tools that an organization uses to produce goods or services.

Production Possibilities Curve

A graphical representation that shows the maximum quantity of one good that can be produced for every possible quantity of another good produced, given the available resources and technology.

Consumer Goods

Products and services that are purchased for personal use or consumption by the general public.

Capital Goods

Goods that are used in producing other goods and services rather than being bought by consumers.