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If Only a Few People Are Affected by an Externality

Question 15

Multiple Choice

If only a few people are affected by an externality, then it is likely that:


A) Pigovian taxes will provide the most efficient solution to the externality
B) command-and-control regulation will provide the most efficient solution to the externality
C) a private solution to the inefficiency will occur
D) a private solution will be very difficult to negotiate

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