One Difficulty in Using Voluntary Transactions to Internalize Externalities Is

question 262

Multiple Choice

One difficulty in using voluntary transactions to internalize externalities is that

• A) people are motivated by self-interest and are often unwilling to engage in a transaction that might make another person better off.
• B) the government usually will not enforce contracts of this type.
• C) transaction costs of coming to an agreement can be very large when numerous people are involved.
• D) people usually don't understand what the real opportunity costs are that they face.

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