Select the appropriate term to complete the sentences.

a. According to the Coase theorem, private parties can negotiate to an efficient solution in the presence of externalities ifthe

(marginal social cost, external benefits, external cost, transaction costs) is (are) relatively low.

b. Suppose Jeremy, Francis, and Andrew are part of Mu Epsilon Nu, a college fraternity known for its very loud, rambunctious weekend parties. The parties annoy many of the residents in nearby apartment complexes due to the loud music and blaring neon lights. This is an example of (neither an external benefit or external cost, an external cost, an external benefit).

Indicate whether each possible solution is a private or non-private approach to the problem caused by the loud fraternity.

c. The local city government sends the police to break up theparties. (private solution to an externality, non-private solution to an externality)

d. The fraternity pays the local community to compensate for the noisepollution. (private solution to an externality, non-private solution to an externality)

e. The residents of the apartment complexes pay Mu Epsilon Nu not to have loudparties. (private solution to an externality, non-private solution to an externality)