The Problem with Externalities Is Essentially One of

question 31

Multiple Choice

The problem with externalities is essentially one of

• A)a discrepancy between private and social costs.
• B)asymmetric information.
• C)the inability of a firm in an industry characterized by increasing returns to scale to make positive profits if it sets price equal to marginal cost.
• D)a failure of the market to generate socially valued outcomes.
• E)the failure of the market to solve social problems.