Asked by Deangelo Johnson on Jul 07, 2024
Verified
In any case where there is a negative externality, it is better to form a government agency to solve the problem.
Negative Externality
A cost that affects a party who did not choose to incur that cost, commonly associated with production or consumption of goods and services.
Government Agency
A government agency is an organization operated by the government to enforce laws, oversee activities, and provide services in a specific area.
- Comprehend the concept of externalities and their impact on efficient market outcomes.
Verified Answer
AD
Alexis DuranJul 13, 2024
Final Answer :
False
Explanation :
While forming a government agency can be one way to address negative externalities, it is not always the best solution. Market-based solutions, regulations, or private negotiations can also effectively address negative externalality issues depending on the context and nature of the externality.
Learning Objectives
- Comprehend the concept of externalities and their impact on efficient market outcomes.