Private Markets Fail to Reach a Socially Optimal Equilibriumwhen External

question 5

Multiple Choice

Private markets fail to reach a socially optimal equilibriumwhen external benefits are present because the:

• A)social value exceeds the private value at the private market solution.
• B)private cost exceeds the social benefit at the private market solution.
• C)private benefit equals the social benefit at the private market solution.
• D)None of the answers is correct.Private markets DO achieve a socially optimal equilibrium when external benefits are
• Present.

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Definitions:

Nominal GDP

The market value of all final goods and services produced within a country in a given period, measured in current prices without adjusting for inflation.

Real GDP

Gross Domestic Product adjusted for inflation, providing a more accurate measure of an economy's size and how it's grown over time.

Market Basket

A representative collection of goods and services used to track price changes for consumer expenditure and calculate inflation rates.

Base Year

A reference year against which economic or financial data is compared and indexed.