Which of the following statements is not correct?
A) Private markets tend to over-produce products with negative externalities.
B) Private markets tend to under-produce products with positive externalities.
C) Private parties can bargain to efficient outcomes even in the presence of externalities.
D) Private parties are usually more successful in achieving efficient outcomes than government policies.

Question

Quizplus · Accepted Answer

Private parties can sometimes bargain to efficient outcomes even in the presence of externalities, but this is not always the case. In many situations, private markets fail to account for the full costs or benefits of their actions, leading to inefficient outcomes. In such cases, government policies may be needed to provide incentives for private parties to internalize externalities and achieve efficient outcomes. Therefore, statement D, which suggests that private parties are usually more successful in achieving efficient outcomes than government policies, is not correct.

Which of the Following Statements Is Not Correct