Private Markets Fail to Reach a Socially Optimal Equilibrium When

question 311

Multiple Choice

Private markets fail to reach a socially optimal equilibrium when negative externalities are present because

• A)social costs equal private costs at the private market solution.
• B)private costs exceed social costs at the private market solution.
• C)social costs exceed private costs at the private market solution.
• D)they internalize externalities.

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Definitions:

Privity of Contract

A doctrine in contract law stipulating that only parties to a contract can sue or be sued on it.

Notice of Assignment

A formal notification to the concerned parties that the rights or interests of an agreement have been transferred from one party to another.

Restrictive Covenant

A clause in a contract that limits certain actions or uses of property to protect business interests or preserve property value.

Public Policy

Principles and actions adopted or proposed by a government to address societal issues and achieve beneficial outcomes.