When Dealing with Externalities,how Can We Correct Market Failure

question 145

Multiple Choice

When dealing with externalities,how can we correct market failure

• A)In the case of positive externalities, the market can correct it, but in the case of negative externalities, government regulation is necessary.
• B)In the case of negative externalities, the market can correct it, but in the case of positive externalities, government regulation is necessary
• C)In the case of both positive and negative externalities, government regulation is often necessary to induce market participants to internalize the externality.
• D)In the case of both positive and negative externalities, market can correct all market failures.

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Definitions:

Societal Factors

Elements within a society that influence and shape individual behaviors, values, and social norms, including culture, education, economy, and politics.

Three-dimensional Model

A conceptual framework that analyzes a subject or issue from three distinct but interrelated perspectives or dimensions.

Alpha Bias

Refers to a tendency in psychological research to exaggerate differences between genders, often reinforcing stereotypes.

Beta Bias

A tendency in research and analysis to minimize or ignore differences between groups, potentially leading to generalized and inaccurate conclusions.