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:

Algebra

A branch of mathematics dealing with symbols and the rules for manipulating these symbols in formulas.

Mathematical Likelihood

A measure of the probability of a set of observations given a particular statistical model.

Practice Or Treatment

The application of a particular procedure or regimen to a subject or subjects in an experiment or study.

Chance

A measure of likelihood or probability that a particular event will occur.