Which of the following is a TRUE statement?

Question

Quizplus · Accepted Answer

Opportunity costs represent the cost of the next best alternative foregone. Therefore, whoever holds property rights will always face opportunity costs, as holding onto or using the property means giving up the opportunity to use it for other purposes. This does not necessarily mean that all externalities will be internalized, as externalities can still occur when property rights are not clearly defined or enforced. Options A and B are false because property rights systems and voluntary agreements can still fail to internalize all externalities. Option D is incorrect because opportunity costs do not turn external costs into social costs; rather, they represent the cost incurred by the holder of property rights.

Which of the Following Is a TRUE Statement