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Business, 07.04.2020 20:25 eneidabenitez14

Consider the following scenario:

Suppose that a flower nursery benefits from having a butterfly farm located only a few miles away, because the presence of the insects greatly improves flower pollination. Lawyers for the two companies meet to draft a legal document specifying the number of butterflies the farm promises to maintain in exchange for payments to be made by the nursery.

Which of the following types of private solutions to the externality of pollination has occurred in this case?

Charities

Moral codes and social sanctions

Integration of different types of businesses

Contracts

It’s important to note that sometimes private solutions to externalities do not work. For example, this occurs when communications barriers or social customs are important enough relative to the potential gains involved that

(A) the government must step in
(B) the private solution is not feasible
(C) The market system has a crisis

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Answers: 1

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Consider the following scenario:

Suppose that a flower nursery benefits from having a bu...

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