Correcting the externality that is present in a market increases the efficiency of the market. What type of externality exists in this market?
A)Negative
B)Positive
C)Network
D)Either negative or positive

Question

Quizplus · Accepted Answer

Externalities, whether negative or positive, can lead to market inefficiencies by causing a difference between the private costs or benefits and the social costs or benefits of a market activity. Correcting these externalities, regardless of their type, aims to align private incentives with social welfare, thereby increasing market efficiency.

Correcting the Externality That Is Present in a Market Increases