MINDTAP From Ca Homework (Ch 10) 9. Private solutions to correct for externaliti

Question

MINDTAP From Ca Homework (Ch 10) 9. Private solutions to correct for externalities Consider the following scenario: Suppose that a chicken farm uses a nearby stream to dispose of the wastes released by its chickens. These wastes flow downstream into a lake that has become thick with algae and polluted due to the minerals in the waste matter. The local office of a nonprofit environmental organization collects enough donations to stop the farm's pollution. Which of the following types of private solutions to the externality of pollution has occurred in this case? O Contracts O Moral codes and social sanctions Charities O Integration of different types of businesses through merger or acquisition t 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 O Type here to search ???@? ?Oo xl

Explanation / Answer

Charities = Here donations are collected in the form of charity to stop the chicken farm from polluting the stream. The funds collected, then can be used to persuade the government or take other measures.

Private Solution is not feasible - If there enough barriers such as social customs, lack of communication and other issues and if these outweigh the potential gains from the solution, then the private solution is not feasible.

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