In Order for a Voluntary Agreement to Be Reached in General

question 150

Multiple Choice

In order for a voluntary agreement to be reached in general, transaction costs should be

• A) infinite.
• B) high relative to expected marginal benefits of the agreement.
• C) low relative to expected marginal benefits of the agreement.
• D) determined by the Environmental Protection Agency.

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Definitions:

Rival

An entity engaged in competition for the same objective or for superiority in the same field.

Public Good

Goods that are non-excludable and non-rivalrous, meaning that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Nonexcludable

Nonexcludable goods are those that cannot feasibly or reasonably be kept from individuals who do not pay for them, one of the characteristics of public goods.

Nonrival

A characteristic of a good whereby one person's consumption does not prevent or decrease the ability of others to enjoy it as well.