Since Externalities Tend to Keep Markets from Reaching a Socially

question 395

Multiple Choice

Since externalities tend to keep markets from reaching a socially optimal equilibrium, government action

• A)is always needed because private solutions can never be attained.
• B)is needed when private solutions fail to arise.
• C)will be needed only to correct for positive externalities.
• D)will be needed only to correct for negative externalities.

---

Definitions:

Benefits

The positive effects or advantages derived from a particular action, decision, or situation.

Status Quo

The existing state of affairs or the current condition, typically used in the context of social, political, or economic issues.

Avoid Risk

The strategy of minimizing exposure to potential losses or harm by carefully managing decisions and actions.

Loss

The state of being deprived of or of being without something that one has had.