Figure 10-2
-Refer to Figure 10-2. This market is characterized by
A)government intervention.
B)a positive externality.
C)a negative externality.
D)a price control.

Question

Figure 10-2 
-Refer to Figure 10-2. This market is characterized by
A)government intervention. 
B)a positive externality. 
C)a negative externality. 
D)a price control.

Quizplus · Accepted Answer

The presence of a negative externality in a market typically means that the cost of producing a good or service is not fully borne by the producer or the consumer, but instead affects third parties who are not involved in the transaction. This can lead to overproduction or overconsumption of the good or service, as the market price does not reflect the true cost to society.

Figure 10-2 -Refer to Figure 10-2. This Market Is Characterized by