When the entire costs and benefits of a transaction are borne by the participants of that transaction:
A)the market outcome will be inefficient.
B)then private costs and social costs are identical.
C)an external cost is imposed on the society.
D)an external benefit is generated in the society.

Question

Quizplus · Accepted Answer

When the entire costs and benefits of a transaction are borne by the participants of that transaction, then private costs and social costs are identical. This means that there are no externalities involved, and the market outcome will be efficient.

When the Entire Costs and Benefits of a Transaction Are