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:

Neurotransmitter

Substances that carry messages from one nerve cell to another through the synaptic gap within the nervous system.

Blood Oxygen

A measure of the amount of oxygen carried by the blood, critical for the functioning of vital organs and typically assessed via pulse oximetry or blood gas tests.

Functional Magnetic Resonance Imaging

A brain imaging technique that measures and maps brain activity by detecting changes associated with blood flow.

Brain Activity

The functioning of the brain, involving complex interactions between neurons and neural circuits to process information, regulate bodily functions, and produce behavior.