Private Markets Fail to Account for Externalities Because

question 155

Multiple Choice

Private markets fail to account for externalities because

• A)externalities don't occur in private markets.
• B)sellers include costs associated with externalities in the price of their product.
• C)decisionmakers in the market fail to include the costs of their behavior to third parties.
• D)the government cannot easily estimate the optimal quantity of pollution.

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Definitions:

Left

Politically, refers to ideologies and movements that typically advocate for social equality, government intervention in the economy to redistribute wealth, and the protection of social welfare programs.

Inflation Expectations

Inflation Expectations are the rate at which people expect prices to rise in the future, influencing their economic decisions.

Long-Run Phillips

The concept in economics that suggests there is no long-term trade-off between inflation and unemployment, indicating that in the long run, the Phillips curve is vertical.

Adverse Supply Shock

An unexpected event that suddenly decreases the supply of a product or commodity, leading to higher prices and lower quantity in the market.