Which of the following is not a valid response to the presence of externalities?
A)internalization
B)do nothing
C)deregulation
D)assigning property rights

Question

Quizplus · Accepted Answer

Deregulation is not a valid response to the presence of externalities because it means removing regulations that could potentially control or mitigate the negative effects of externalities. The other three choices are valid responses: 
Internalization involves adjusting incentives and/or prices to make individuals and firms factor in the external costs or benefits they impose on others, thereby reducing or eliminating externalities.
Doing nothing would maintain the status quo, but it may not be the best choice if the externalities cause significant harm or inefficiency.
Assigning property rights would create a market for the affected parties to negotiate the optimal allocation of resources and the associated externalities.

Which of the Following Is Not a Valid Response to the Presence