According to Pigou, the Best Way to Deal with a Negative

question 12

Multiple Choice

According to Pigou, the best way to deal with a negative externality is to

• A)allow both parties to negotiate.
• B)assign liability to the party with the highest cost of prevention.
• C)assign liability to the party with the lowest cost of prevention.
• D)tax it.

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Definitions:

Information Flow

The movement or transmission of data, knowledge, or communication within a system or between entities.

Decision Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Customers

Individuals or entities that purchase goods or services from a business or organization.

Suppliers

Entities that provide goods or services to another entity, typically a company, for production, resale, or use in operations.