Q1. Which of the following prevents private market negotiations from adequately addressing an externality?

A. Unclear property rights

B. Perfect competition

C. Allocative efficiency

D. Low or zero transaction costs

E. Perfectly symmetric information

Q2. Use the graph to answer the question that follows.

100 80 - - 60 Percentage of Income 40 2020 2015 20 2010 0 20 40 60 80 100 Percentage of Households100 80 - - 60 Percentage of Income 40 2020 2015 20 2010 0 20 40 60 80 100 Percentage of HouseholdsPrice ($) S T $600 V W $400 X D 15,000 20,000 Quantity\f\f35 .................. 30 ....................... 25 20 MSB Price ($) 15 MSC 10 MPC S MPB 0 5 10 15 20 25 30 35 40 45 Quantity