Which of the following is a TRUE statement?
A) Externalities cannot be solved by market solutions and always require government action.
B) Externalities would never be a problem if people were willing to comply with government regulations.
C) Voluntary agreements can solve externality situations by making the party incurring the costs bear the costs of his or her actions.
D) Externalities can only be handled by government regulation and emission taxes cannot work effectively.
Answer: C
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Fractional reserve banking began
A) in ancient Greece. B) in the early nineteenth century. C) in the early twentieth century. D) in the Middle Ages.
For a product with a constant or gently increasing opportunity cost of producing additional units, as more is produced, we expect that
A) demand is price elastic. B) supply is price elastic. C) demand is price inelastic. D) supply is price inelastic. E) demand is unit elastic.
The quantity theory assumes that
a. velocity is constant. b. income is constant. c. prices are constant. d. transactions are constant.
Economics can decide
a. the appropriate trade-off between fairness and efficiency. b. which pricing arrangements are fair and which are unfair. c. whether a pricing decision will impose heavy inefficiency costs on society. d. All of the above are correct.