When there are significant costs involved with coordinating a private solution to an externality:
A) a leader will likely be elected to organize the coordination.
B) it can act as a motivating factor to solve the externality problem expediently.
C) it likely will not happen.
D) None of these statements is true.

Question

Quizplus · Accepted Answer

Significant costs involved with coordinating a private solution to an externality make it unlikely to happen. This is because coordinating a private solution involves multiple parties that need to agree on the terms and conditions of the solution, which can be time-consuming, expensive, and complicated. Moreover, the parties may have different interests and incentives that can make it difficult to reach a mutually agreeable solution. Therefore, in such cases, the externality problem is more likely to persist, leading to a suboptimal outcome for all parties involved.

When There Are Significant Costs Involved with Coordinating a Private