When a negative externality is present in a market,when a quota is imposed,it is:
A) efficient, because the market consumes the efficient level.
B) not efficient, because individuals' net benefits from the amount set by the quota are different.
C) efficient, because the net benefit of everyone at the amount set by the quota is equal.
D) not efficient, because the marginal cost outweighs the marginal benefit for too many consumers at the amount set by the quota.

Question

Quizplus · Accepted Answer

A quota can lead to inefficiency because it may not align with the optimal level of consumption where marginal social cost equals marginal social benefit, leading to different net benefits for individuals.

When a Negative Externality Is Present in a Market,when a Quota