If Bargaining Is Costless and an Externality Exists

question 22

Multiple Choice

If bargaining is costless and an externality exists:

• A)an efficient outcome may be reached depending on which party is assigned property rights.
• B)an efficient outcome will be reached regardless of which party is assigned property rights.
• C)an efficient outcome will not be reached without government intervention.
• D)an efficient outcome can never be reached.

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Definitions:

Charge

A fee or price asked for goods and services, or an accounting entry reflecting a debt or liability.

Variable Factory Overhead

Expenses in a factory operation that vary with production volume, such as utilities or raw materials.