Markets Are Often Inefficient When External Costs Are Present Because

question 247

Multiple Choice

Markets are often inefficient when external costs are present because:

• A) externalities cannot be corrected without government regulation.
• B) social costs exceed private costs at the private market solution.
• C) private costs exceed social costs at the private market solution.
• D) production externalities lead to consumption externalities.

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Definitions:

Rate of Return

The increase or decrease in the value of an investment throughout a certain period, represented as a fraction of the original investment's price.

EPS

Earnings Per Share, indicating the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company’s profitability.

Preferred Stock

A class of stock that offers certain advantages over common stock, typically including fixed dividend payments and priority over common stock in asset liquidation.

Rate of Return

The advancement or decline in an investment’s worth over a stipulated period, framed as a percentage of the original investment amount.