If Jamal successfully and completely internalizes a negative externality, it follows that
A)transaction costs are zero.
B)his marginal private costs are equal to marginal social costs.
C)information is asymmetric.
D)information is symmetric.

Question

Quizplus · Accepted Answer

Internalizing a negative externality means that Jamal is taking into account the full cost of his actions, including the costs imposed on society. This means that his marginal private costs (the costs he personally faces) are equal to the marginal social costs (the costs to society as a whole), which is the optimal outcome in terms of reducing the negative externality. Transaction costs and information symmetry/asymmetry are not directly related to the internalization of the externality.

If Jamal Successfully and Completely Internalizes a Negative Externality, It