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When Negative Externalities Are Involved, the Market Is Said to

Question 49

Multiple Choice

When negative externalities are involved, the market is said to


A) fail, because it underproduces the good connected with the negative externality.
B) fail, because it overproduces the good connected with the negative externality.
C) succeed, because it produces the socially optimal quantity of the good connected with the negative externality.
D) be "in optimum," because the equilibrium fully adjusts for the negative externality.

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