Which of the following must be present to reach a private solution to an externality problem?
A) A majority of the parties affected by the externality must agree to a solution.
B) The transaction costs to negotiate a solution must be relatively low.
C) The total number of people, creators of the problem and those affected, must be relatively large to justify negotiating a solution.
D) The government must approve the solution for it to be a legal solution.
Correct Answer:
Verified
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