Markets Fail When Externalities Are Present

question 40

Multiple Choice

Markets fail when externalities are present

• A) because all of the costs and benefits of producing a good are reflected in the market price.
• B) because some of the costs and benefits of producing a good are not reflected in the market price.
• C) only if they are negative; positive externalities are not market failures.
• D) because profits are not maximized.
• E) if the positive externalities are less than the negative externalities.

---

Definitions:

Popular Culture

The set of ideas, perspectives, attitudes, images, and other phenomena that are within the mainstream of a given culture, especially Western culture in the late 20th and early 21st centuries.

Parallel Distributed Processing (PDP)

A computational approach to understanding how the brain processes information, emphasizing the simultaneous activity of multiple neural networks.

Memory Model

A theoretical framework describing how memory processes work, including how information is encoded, stored, and retrieved.

Processing Units

Components within a computer that execute instructions from software applications.