Bargaining Costs Are Generally High in Cases Involving Environmental Externalities

question 25

Multiple Choice

Bargaining costs are generally high in cases involving environmental externalities because

• A)there are strong incentives to be a free rider.
• B)many individuals may be affected by the externalities.
• C)it is difficult to measure the costs of the externalities.
• D)all of the other answers are correct.

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Definitions:

Net Exports

Spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports).

Central Bank

An institution that manages a country's currency, money supply, and interest rates, usually with the aim of managing inflation and ensuring financial stability.

Federal Reserve Act

The act of Congress that created the Federal Reserve System in 1913, establishing the central banking system of the United States.

Maximum Employment

An economic situation in which all available labor resources are being used in the most efficient way possible.