Private Markets Fail to Reach a Socially Optimal Equilibrium When

question 236

Multiple Choice

Private markets fail to reach a socially optimal equilibrium when external benefits are present because the:

• A) social value exceeds the private value at the private market solution.
• B) private cost exceeds the social benefit at the private market solution.
• C) private benefit equals the social benefit at the private market solution.
• D) None of the answers is correct. Private markets DO achieve a socially optimal equilibrium when external benefits are present.

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