The Similarity Between Markets for Common Resources and Markets with Externalities

question 43

Multiple Choice

The similarity between markets for common resources and markets with externalities is that:

• A) the equilibrium quantity is too high in terms of society.
• B) the price that competitive firms charge does not capture the true costs and benefits of consumption.
• C) government involvement is needed to reach an efficient outcome.
• D) generally we get an oversupply at market.

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Definitions:

Costs of Incarceration

The economic and social expenses associated with maintaining prison systems and the long-term impact on incarcerated individuals and society.

Debtors

Individuals or entities that owe money to another party. This can relate to various sectors including loans, credit, or other financial obligations.

War on Drugs

A campaign led by governments aimed at reducing the illegal drug trade.

Criminal Justice System

The network of government institutions and practices responsible for upholding social control, deterring crime, and sanctioning those who violate laws with criminal penalties.