If an external cost is present in a market, economic efficiency may be enhanced by:
A) increased competition.
B) weakening property rights.
C) better informed market participants.
D) government intervention.

Question

Quizplus · Accepted Answer

Government intervention can help correct external costs by imposing taxes or regulations that internalize the cost and make the market participants bear the full cost of their actions. This can lead to a more efficient allocation of resources and help prevent market failure caused by externalities. The other choices do not necessarily address the presence of external costs in the market and may not lead to increased economic efficiency.

If an External Cost Is Present in a Market, Economic