Private Solutions to the Problem of Externalities Are Most Likely

question 140

Multiple Choice

Private solutions to the problem of externalities are most likely when

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

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Definitions:

External Locus

A belief that one's life events are predominantly controlled by external factors, events, or influences rather than one's own efforts or actions.

Locus of Control

A person's belief about the extent to which their actions can influence events and outcomes in their lives, classified as either internal (self-driven) or external (driven by outside forces).

Blood Cholesterol

Blood cholesterol refers to the levels of cholesterol in the bloodstream, which include low-density lipoprotein (LDL, or "bad" cholesterol) and high-density lipoprotein (HDL, or "good" cholesterol), influencing heart health.

Blood Pressure

The force exerted by circulating blood on the walls of blood vessels, often measured as an indicator of heart health.