Private Markets Fail to Reach a Socially Optimal Equilibrium When

question 37

Multiple Choice

Private markets fail to reach a socially optimal equilibrium when positive externalities are present because the

• A)private benefit equals the social benefit at the private market solution.
• B)private cost exceeds the private benefit at the private market solution.
• C)social value exceeds the private value at the private market solution.
• D)private cost exceeds the social benefit at the private market solution.

---

Definitions:

Long-Term Investments-AFS

Available-for-Sale Long-term Investments are financial assets not classified as trading or held-to-maturity investments, valued at fair market prices with gains or losses reported in other comprehensive income.

Trading Securities

Financial instruments such as shares, bonds, or other securities that are purchased with the intention of selling them in the short term to profit from price fluctuations.

Debt Securities

Financial instruments representing money borrowed that must be repaid, such as bonds, bills, or notes.

Available-for-Sale Securities

Financial assets that a company intends to sell within a short period but can hold onto for an indefinite period, classified as neither held for trading nor held to maturity.