When does a private solution to a negative externality fail to allocate resources efficiently?
What will be an ideal response?
Private bargaining between the party generating a negative externality and the party suffering from it leads to an efficient allocation of resources. However, such a private solution fails to allocate resources efficiently when the transaction costs associated with bargaining are too high and the number of affected people is large.
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Economists use different definitions of money because
A) deposits can be domestic or international. B) deposits may be held at banks or savings and loans. C) it is not always clear which assets are used primarily as money. D) there are differences in the frequency with which depositors use their accounts.
Graph typical total, average, and marginal cost curves and explain how their shapes are influenced by the law of diminishing returns. Graph TC on a separate graph, AC and MC on a second graph.
What will be an ideal response?
Using Scenario 2 what would be the number of points that the testing company would have to award to make students indifferent between guessing and not guessing even when the student has eliminated three of the answers if it still wishes to impose a
five point penalty for guessing incorrectly. Would this be any different than awarding one point for correct answers and zero points for wrong answers?
The conditions for joining the "Euro" single-currency block led a number of European countries to ________ and consequently reduce their debt-GDP ratios
A) tighten monetary policy B) loosen monetary policy C) loosen fiscal policy D) tighten fiscal policy