Private Markets Fail to Reach a Socially Optimal Level When

question 31

Multiple Choice

Private markets fail to reach a socially optimal level when positive consumption externalities are present because:

• A)private benefit equals social benefit at the private market solution
• B)private costs exceed private benefits at the private market solution
• C)social value exceeds private value at the private market solution
• D)private costs exceed social benefit at the private market solution

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Definitions:

Tariff Barriers

Economic measures implemented by countries to restrict imports by increasing the cost of foreign goods through taxes.

Foreign Direct Investment

Investment made by a company or individual in one country in business interests in another country, in the form of establishing business operations or acquiring business assets.

Neoliberal Globalization

An economic and political paradigm that promotes free markets, deregulation, and an increase in global trade and investment.

World Trade Organization

An international organization that regulates international trade, setting legal and institutional foundations for global trade relations.