3.Negative externality occurs when

a)the production of a good harms third parties.

b)the production of a good helps third parties.

c)a buyer is sold inferior and damaged merchandise.

d)the consumption of a good helps third parties.

11.

Given high transactions costs, the best way to deal with a positive externality is

a)to tax it.

b)to subsidize it.

c)to allow both parties to negotiate.

d)to limit the extent of the externality.

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