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.

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Definitions:

Researcher

An individual who conducts systematic investigation to establish facts and reach new conclusions in a specific field of study.

Saccharin Solution

An artificial sweetener used in various food products, presented here in a dissolved form.

Aversion

A strong dislike or disinclination towards something.

Shocked

A sudden and intense emotional or physical reaction caused by an unexpected event or information.