When There Is Market Failure Due to a Negative Externality

question 39

Multiple Choice

When there is market failure due to a negative externality:

• A)there are no way of correcting it.
• B)setting price equal to marginal social cost will solve it.
• C)the free market produces output at a too high price.
• D)externalities have been taken into account.
• E)the best solution eliminates the externality entirely.

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Definitions:

Somatic

Relating to the body, specifically as distinguished from the mind or psyche.

Central

Pertaining to or situated at the center, or essential and core aspect of something, especially in the context of information or systems.

Genotype

The genetic makeup of an individual organism, including the set of genes inherited from their parents.

Phenotype

The observable physical or biochemical characteristics of an organism as determined by both genetic makeup and environmental influences.