Use the Following to Answer Question(s): Correcting for Market Failure

question 121

Multiple Choice

Use the following to answer question(s) : Correcting for Market Failure: External Cost

-(Exhibit: Correcting for Market Failure: External Cost) Assume that there is an external cost involved, as illustrated in the exhibit.If the government intervenes to correct for the external cost, there will be a(n) ________ in _______ of _______ .

• A) decrease; benefit; WTVR
• B) increase; cost; WTUR
• C) decrease; net benefit; TUV
• D) increase; deadweight loss; TUV

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Definitions:

Security

A financial instrument representing an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Dark Pools

Private financial forums or exchanges for trading securities not accessible by the investing public, often used by large institutions to avoid impacting the market with large orders.

Anonymity

The condition of being anonymous, where an individual's identity is unknown or concealed.

Large Blocks

Trades involving a significantly large quantity of stocks or securities, typically used by institutional investors.