When a Market Is Characterized by an Externality, the Government

question 392

Multiple Choice

When a market is characterized by an externality, the government

• A)can correct the market failure only in the case of positive externalities.
• B)can correct the market failure only in the case of negative externalities.
• C)can correct the market failure in the case of both positive and negative externalities by inducing market participants to internalize the externality.
• D)cannot correct for externalities due to the existence of patents.

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Definitions:

Crustal Extension

The process by which the Earth's crust is stretched and thinned, often associated with the formation of rift valleys and basins.

Mesozoic

An era of geological time from about 252 to 66 million years ago, known for the rise of dinosaurs and significant volcanic activity.

Cenozoic

The current geological era, beginning around 66 million years ago and characterized by the significant development and spread of mammals on Earth.

Ancestral Rockies

Refers to a mountain range that existed in the western United States during the late Paleozoic era, before the formation of the modern Rocky Mountains.