Question

Suppose that factories in Chicago, Illinois, and Gary, Indiana, produce pollution thataffects people living in western Michigan. Even though the polluting plants and affectedindividuals can be identified, the externality cannot be resolved privately because of thelarge number of both polluters and affected individuals. This is an example of:

A)the assignment problem.
B)the free rider problem.
C)Crowding out of pollution
D)transaction costs and negotiating problems.

Answer 1

D)

Step-by-step explanation:

transaction costs and negotiating problems

Since the factories cannot come to common agreement and solve the pollution issue, the correct answer is transaction costs and negotiating problems