A Familiar Example of a Negative Externality Is Loud Music

question 97

Multiple Choice

A familiar example of a negative externality is loud music on a college campus. In principle, it should be possible to internalize this externality by permitting students to negotiate rights to play music during particular times. The most likely reason that this does NOT happen is that:

• A) most students are unfamiliar with the Coase theorem.
• B) the transaction costs associated with identifying and establishing communication with students would be high.
• C) agreements arising from such negotiations could not be enforced.
• D) most students don't view loud music as a negative externality.

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Definitions:

High Potential

Referring to individuals or entities that exhibit the capacity for significant growth or achievement.

Need for Achievement

A psychological trait characterized by an individual's desire to achieve excellence and set challenging goals.

Adverse Situations

Circumstances or events that are unfavorable and pose challenges to an individual's or organization's goals and objectives.

Exert Influence

To apply or use power, authority, or influence to affect or sway someone or something's actions or decisions.