When an Externality Is Present, the Market Equilibrium Is

question 116

Multiple Choice

When an externality is present, the market equilibrium is

• A)efficient, and the equilibrium maximizes the total benefit to society as a whole.
• B)efficient, but the equilibrium does not maximize the total benefit to society as a whole.
• C)inefficient, but the equilibrium maximizes the total benefit to society as a whole.
• D)inefficient, and the equilibrium does not maximize the total benefit to society as a whole.

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Definitions:

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