Home › AP Microeconomics › Economics › Negative Externalities › Economists commonly refer to externalities as an…
Economists commonly refer to externalities as an example of:
APerfect competition
BComparative advantage
CMarket failure
DMarket success
Answer & Solution
Correct answer: C. Market failure
1. Markets miss something when spillovers exist.
2. Externalities represent a case where markets no longer consider all social costs.
3. Markets consider only some of those costs.
4. So economists commonly refer to externalities as an example of market failure.
_Source: OpenStax Principles of Microeconomics for AP Courses 2e (CC BY 4.0), Ch 12 'Environmental Protection and Negative Externalities'_
Related questions
A pollution charge differs from command-and-control regulation because the charge:Comparing the private and social supply curves, the social curve for a polluting firm liesExternalities count as market failure because markets consider social costs that are:Permits are described as marketable, which means that firms can:Which three categories are named as the market-oriented approaches to pollution control?Laws specifying allowable pollution quantities and required control technologies fall undeTaking external pollution costs into account results in a quantity of production that is:Taking external pollution costs into account results in a price that is: