If the presence of externalities clouds the signals that prices give in respect to costs and benefits,:
A) the market will produce an output level that is too high.
B) the market will produce an output level that is too low.
C) the invisible hand will fail to perfectly balance the allocation of resources across industries.
D) the invisible hand will still achieve maximum economic efficiency.

Question

Quizplus · Accepted Answer

The Answer of If the presence of externalities clouds the signals that prices give in respect to costs and benefits,:
A) the market will produce an output level that is too high.
B) the market will produce an output level that is too low.
C) the invisible hand will fail to perfectly balance the allocation of resources across industries.
D) the invisible hand will still achieve maximum economic efficiency.

If the Presence of Externalities Clouds the Signals That Prices