What do externalities cause markets to do
A)fail to allocate resources efficiently
B)cause price to be different than the equilibrium price
C)benefit producers at the expense of consumers
D)cause markets to operate more equitably

Question

Quizplus · Accepted Answer

Externalities cause markets to fail to allocate resources efficiently because the market does not take into account the full costs or benefits of a transaction, leading to either overproduction or underproduction of goods or services.

What Do Externalities Cause Markets to Do