Private Solutions to the Problem of Externalities Are Most Likely

question 76

Multiple Choice

Private solutions to the problem of externalities are most likely when

• A)government actively encourages these solutions.
• B)transactions costs are low and the number of bargaining parties is small.
• C)transactions costs are low and the number of bargaining parties is large.
• D)transactions costs are low and the monetary damages to third parties is high.

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Definitions:

Economic Significance

The importance of an economic outcome or event in terms of its implications on the economy or financial markets.

Limited Problem Solving

A consumer decision-making process used for purchases that require a moderate amount of effort and time for information gathering and deliberation.

Video Game Console

A dedicated electronic device designed to play video games that are typically connected to a television or other display screen.

Gamer Friends

Individuals who connect and build relationships based on their shared interest in video games.