If the Costs of Negotiation Are Small but Not Negligible

question 19

Multiple Choice

If the costs of negotiation are small but not negligible,

• A)the best available 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 best way to deal with the externality is to tax it.

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Definitions:

Training

The process of teaching or acquiring skills, knowledge, or competencies as a result of the teaching of vocational or practical skills and knowledge.

Superordinate Goals

Objectives shared among individuals or groups that necessitate cooperation, often used to resolve conflicts.

Self-managed Teams

Teams in which members together assume the roles of planning, executing, and evaluating their own work.

Shared Mental Models

Knowledge structures held by members of a team that enable them to form accurate explanations and expectations for the task, and, in turn, coordinate their actions and strategies.