If the Costs of Negotiation Are Small but Not Negligible

question 25

Multiple Choice

If the costs of negotiation are small but not negligible,

• A)An efficient outcome results if the liability is placed on the party with the lowest cost of prevention
• B)An efficient outcome results no matter how the law assigns responsibility
• C)Efficiency cannot be reached without government intervention
• D)The correct way to deal with an externality is to tax it

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Definitions:

Spoken Language

A form of communication consisting of the use of words and sentences spoken by the mouth, unique to humans.

Temporal Lobe

The region of the brain located beneath the lateral fissure on both cerebral hemispheres, associated with processing auditory information and encoding memory.

Temporal Lobe

A region of the cerebral cortex located at the sides of the brain, responsible for processing auditory information and involved in memory, emotion, and language.

Parietal Lobe

A region of the cerebral cortex involved in processing sensory information regarding the location of parts of the body as well as interpreting visual information and processing language and mathematics.