The story in your book about Austria and the nuclear power plants is a clear case of which of the following?
A)When externalities exist it is easy to negotiate an agreement between the offender and the offended party.
B)Political differences can sometimes override rationality, raising negotiation costs and making solutions difficult or impossible.
C)The story supports the claim of the Coase Theorem that the liability for actions should be placed on the side that has the lowest cost of correcting the problem.
D)When coal powered plants become offensive countries will switch to nuclear power in order to maintain political stability in a region.

Question

Quizplus · Accepted Answer

The story in the book about Austria and the nuclear power plants shows how political differences can override rationality and make finding a solution difficult, as Austria refused to negotiate with Czechoslovakia about the issue. The story does not support the Coase Theorem or provide evidence of countries switching to nuclear power to maintain political stability.

The Story in Your Book About Austria and the Nuclear