Which of the Following Must Be Present to Reach a Private

question 220

Multiple Choice

Which of the following must be present to reach a private solution to an externality problem?

• A) A majority of the parties affected by the externality must agree to a solution.
• B) The transaction costs to negotiate a solution must be relatively low.
• C) The total number of people, creators of the problem and those affected, must be relatively large to justify negotiating a solution.
• D) The government must approve the solution for it to be a legal solution.

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Definitions:

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, leading to the net profit or loss for the period.

Liquidation

The process of winding up a company's financial affairs by selling its assets to pay off its debts, with any remaining assets distributed to shareholders.

Reorganization

The process of restructuring a company's business affairs, structure, or ownership, often in times of financial difficulty, to improve efficiency and profitability.

Bankruptcy

A judicial process concerning an individual or company that cannot pay back their due debts.