If the costs of coordination and enforcement are _______________ the surplus lost to the externality,then ________________.
A) higher than; a private solution will not work
B) lower than; a private solution will not work
C) higher than; a private solution will work
D) None of these statements is true.

Question

Quizplus · Accepted Answer

If the costs of coordination and enforcement are higher than the surplus lost to the externality, then a private solution (without government intervention) will not work because the costs of private coordination and enforcement will outweigh the benefits of addressing the externality.

If the Costs of Coordination and Enforcement Are _______________ the Surplus