List and briefly describe the four major types of transactions costs involved when dealing with a negative externality
What will be an ideal response?
Search costs are the costs of determining who to bargain with.
Collectivization costs are the costs of organizing all the affected parties so that bargaining can take place.
Negotiation costs are the costs of the actual bargaining process.
Monitoring and enforcement costs are the costs of ensuring that the parties live up to the promises they made in bargaining.
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In Figure 3-4 above, an equilibrium income of 2000 occurs when planned autonomous spending is
A) 750. B) 800. C) 1250. D) 250.
Probabilities, which are based on past data or experience, are called
A) a priori. B) objective. C) uncertain. D) statistical.
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,
a. the demand curve for physicals shifts to the right. b. the supply curve for physicals shifts to the left. c. the quantity demanded of physicals increases and the quantity supplied of physicals decreases. d. the number of physicals performed will increase.
When quantity demanded is greater than quantity supplied
A. price will fall to its equilibrium price. B. price will rise to its equilibrium price. C. price may rise, fall, or stay the same, depending on a variety of factors.