Question

"Which of the following is an example of a transaction costLOADING... associated with negotiating the reduction of a negative​ externality?

An example of a transaction cost is
A.the total cost of reducing a negative externality.
B.the cost of a negative externality on others.
C.the cost associated with not reducing a negative externality.
D.the time required to negotiate an agreement
to reduce a negative externality.
E.the marginal cost of reducing a negative externality.
How might transaction costs affect private solutions to externality​ problems?
Transaction costs
A.may make private solutions to reduce negative externalities no longer feasible.
Your answer is correct.
B.may make private solutions to reduce negative externalities unnecessary.
C.do not affect private solutions to reduce negative externalities.
D.may make private solutions to reduce negative externalities easier.
E.may provide additional incentive for private solutions to reduce negative externalities.

Answer 1

An example of a transaction cost associated with negotiating the reduction of a negative externality is the time required to negotiate an agreement. Transaction costs can make private solutions to reduce negative externalities no longer feasible or easier depending on the costs involved.

Step-by-step explanation:

An example of a transaction cost associated with negotiating the reduction of a negative externality is the time required to negotiate an agreement to reduce the negative externality. Transaction costs refer to the costs involved in making an agreement or conducting a transaction, such as legal fees, administrative costs, and the time and effort required.

Transaction costs can affect private solutions to externality problems in various ways. They may make private solutions to reduce negative externalities no longer feasible due to the high costs involved. Alternatively, transaction costs may make private solutions to reduce negative externalities easier if there are lower costs associated with the negotiation and implementation of solutions.