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:

Ambiguous Stimuli

Information or sensory inputs that can be interpreted in more than one way and do not have a clear or definitive interpretation.

Inferiority Complex

A psychological condition in which an individual feels a deep sense of inadequacy, stemming from real or imagined deficiencies, often leading to overcompensation or withdrawal.

Playground Bullies

Individuals, often children or adolescents, who use power to harm or intimidate others in a school setting.

Self-Identity

The perception or awareness one has of oneself as a distinct, continuous entity with individual characteristics, values, and history.