If only a few people are affected by an externality,what will likely happen
A)Corrective taxes will provide the most efficient solution to the externality.
B)Command-and-control regulation will provide the most efficient solution to the externality.
C)A private solution to the inefficiency will occur.
D)A private solution will be very difficult to negotiate.

Question

Quizplus · Accepted Answer

If only a few people are affected by an externality, a private solution to the inefficiency will likely occur. The affected parties may negotiate and come up with a solution that addresses the externality without the need for government intervention. In this case, corrective taxes or command-and-control regulations may not be necessary or efficient.

If Only a Few People Are Affected by an Externality,what