In What Sense Do Externalities Cause the "Invisible Hand" of the Marketplace

question 207

Multiple Choice

In what sense do externalities cause the "invisible hand" of the marketplace to fail?

• A)Externalities lead to government intervention in markets, which exacerbates the problems associated with externalities.
• B)Externalities result in prices that are too high for many consumers to pay.
• C)Markets fail to produce the maximum total benefit to society when positive or negative externalities are present.
• D)Markets produce too little of a good when positive or negative externalities are present.

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Definitions:

U.S.

A country located in North America, known officially as the United States of America, which is a federal republic consisting of 50 states.

Goods And Services Deficit

The situation where a country imports more goods and services than it exports, leading to a negative trade balance.

Imports

Goods and services purchased from other countries, contributing to a country's consumption beyond domestic production.

Italy

A country located in southern Europe, known for its rich history, cultural landmarks, and significant contributions to art, food, fashion, and science.