Suppose That Factories in Chicago,Illinois,and Gary,Indiana,produce Pollution That Affects People

Multiple Choice

Suppose that factories in Chicago,Illinois,and Gary,Indiana,produce pollution that affects people living in western Michigan.Even though the polluting plants and affected individuals can be identified,the externality cannot be resolved privately because of the large number of both polluters and affected individuals.This is an example of:

A) the assignment problem.
B) the free rider problem.
C) the problem of internalizing an externality.
D) transaction costs and negotiating problems.