When There Is Market Failure Due to a Negative Externality

question 38

Multiple Choice

When there is market failure due to a negative externality,

• A) innocent people will suffer since it cannot be corrected.
• B) setting price equal to marginal social cost will solve it.
• C) the free market produces too little output.
• D) externalities have been taken into account.
• E) the best solution eliminates the externality entirely.

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Definitions:

Disturbed Sensory Perception

A condition where an individual's processing of sensory information is altered, leading to misinterpretation of the environment.

Ineffective Coping

A psychological state where an individual is unable to successfully manage stressful events or conditions, adversely affecting their health and well-being.

Unilateral Neglect

A neurological condition in which a patient is unaware of and does not respond to one side of the body or environment, often after a stroke.

Risk For Falls

A potential for accidental falling, which may result in physical harm, often assessed in healthcare settings for preventative measures.