Externalities tend to cause markets to be
A)inefficient.
B)inequitable.
C)unnecessary.
D)overwhelmed.

Question

Quizplus · Accepted Answer

Externalities, like pollution or congestion, affect parties outside of a market transaction and can lead to market inefficiency. The market may not take into account the costs or benefits to third parties, leading to an overproduction or underproduction of goods or services, and ultimately resulting in a suboptimal outcome.

Externalities Tend to Cause Markets to Be