In the absence of public policies, markets will ensure that:
A)demand will always reflect all positive externalities in consumption
B)demand will always reflect all negative externalities in consumption
C)supply will always reflect all negative and/or positive externalities in production
D)none of the above holds true

Question

Quizplus · Accepted Answer

In the absence of public policies, markets will not ensure that demand reflects positive externalities in consumption or that demand reflects negative externalities in consumption. Similarly, supply will not always reflect negative and/or positive externalities in production. Market failures such as externalities occur sometimes, and governments need to intervene to address them.

In the Absence of Public Policies, Markets Will Ensure That