Markets Fail When Externalities Are Present

question 40

Multiple Choice

Markets fail when externalities are present

• A) because all of the costs and benefits of producing a good are reflected in the market price.
• B) because some of the costs and benefits of producing a good are not reflected in the market price.
• C) only if they are negative; positive externalities are not market failures.
• D) because profits are not maximized.
• E) if the positive externalities are less than the negative externalities.

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Definitions:

Service Quality

A measure of how well a delivered service matches customer expectations, often evaluated through dimensions like reliability, responsiveness, assurance, empathy, and tangibles.

Gap Analysis

A method of assessing the differences between actual performance and potential or desired performance in an organization, often used to identify areas for improvement.

Organizational Delivery

The method or process through which a company provides its products or services to its customers.

Service Quality Dimensions

Various aspects or factors through which customers evaluate the quality of a service, including reliability, responsiveness, assurance, empathy, and tangibles.