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.
c
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The percentage change in quantity supplied that results from a 1 percent change in price is known as the:
A. slope of the supply curve. B. cross-price elasticity of supply. C. cross-price elasticity of demand D. price elasticity of supply
In the treatment of U.S. exports and imports, national income accountants ________.
A. add both exports and imports in calculating GDP B. subtract exports but add imports in calculating GDP C. subtract both exports and imports in calculating GDP D. add exports but subtract imports in calculating GDP
Suppose the price level decreases and real GDP remains the same. Then
A) nominal GDP must decrease. B) nominal GDP must remain unchanged. C) nominal GDP must increase. D) none of the above are true.
Supply-side economists argued that, given existing tax laws, the high inflation of the 1970s
a. lowered the effective tax rate on corporate income. b. did not have any effect on the aggregate supply curve. c. raised the effective tax rate on corporate income. d. may have raised but probably lowered the effective tax rate on corporate income. e. both b and c.