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:

Revenue

Income that a business receives from its normal business activities.

Recorded

The action of documenting financial transactions in accounting records to keep an accurate and organized track of a company's financial activities and position.

Cash Received

The total amount of money, including cash, checks, and electronic transfers, that is received by a business during a specified period.