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.

---

Definitions:

Leaking Oil

The unintentional escape of oil from a system or container, usually due to a breach in containment like a seal or gasket failure.

Front And Rear Seals

Components in an engine or transmission that prevent oil or fluid leakage at either end.

Plugged Breather

A condition where the vent or breather in a mechanical system is blocked, potentially leading to pressure build-up or operational issues.

Splitter Slip-Out

A situation where the splitter gear in a transmission disengages unexpectedly, often leading to a loss of power or control.