Why do private markets fail to account for externalities?
a) The government can easily correct any adverse effect on the market that externalities may cause.
b) Externalities don't occur in private markets.
c) Decision makers in the market fail to take into account the external effects of their behaviour.
d) Sellers include costs associated with externalities in the price of their products.
Answer: c) Decision makers in the market fail to take into account the external effects of their behaviour.
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Which of the following is included in the GDP?
A) the current services flowing from the housing stock B) the estimated value of drugs sold illegally C) the estimated value of leisure time D) transfer payments such as Social Security and veterans' benefits E) private purchases of used assets
The Mokyr-DeCanio thesis states that real wages of Northern workers lagged behind price increases during the Civil War (1861–1865), thus shifting to the workers themselves a major part of the war's cost
Indicate whether the statement is true or false