Suppose a Negative Externality Exists in a Market

question 16

Multiple Choice

Suppose a negative externality exists in a market. If transactions costs are low and parties are willing to bargain, then, according to the Coase theorem,

• A) an equitable solution can be reached only if property rights are assigned to the victims of pollution and not the polluters.
• B) an equitable solution can be reached only if property rights are assigned to polluters and not to the victims of pollution.
• C) an efficient solution can be reached regardless of the initial assignment of property rights.
• D) government intervention is necessary to reach an efficient and equitable solution.

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Definitions:

Adaptive Immunity

A component of the immune system that involves the creation of antibodies and memory cells to provide long-term immunity against pathogens.

Efferent Lymphatic Vessels

Vessels that carry lymph away from lymph nodes towards the heart or larger lymphatic vessels, aiding in immune response and fluid balance.

Afferent Lymphatic Vessels

Vessels that carry lymph towards the lymph nodes, playing a key role in the immune response by transporting antigens.

Cortical Sinuses

Specialized vascular channels found in the spleen's cortex that aid in filtering the blood and immune response modulation.