The motivation for private solutions to externalities is that
A) resources are misallocated and thus economic surplus can be increased.
B) individuals are more concerned about pollution now.
C) of profit maximization.
D) of utility maximization.
E) individuals mistrust governmental solutions.

Question

Quizplus · Accepted Answer

Private solutions to externalities can lead to the optimal allocation of resources and increase economic surplus by internalizing external costs and benefits. This is because private actors can directly negotiate and come to agreements on how to internalize externalities, rather than relying on government intervention.

The Motivation for Private Solutions to Externalities Is That