Externalities tend to cause markets to be
A)inefficient.
B)unequal.
C)unnecessary.
D)overwhelmed.

Name: Externalities tend to cause markets to be A)inefficient. B)unequal. C)unnecessary. D)overwhelmed.
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Question

Quizplus · Accepted Answer

Externalities are costs or benefits that affect people outside of the transaction between the buyer and seller. Markets fail to take into account these external costs or benefits, resulting in an inefficient allocation of resources. Thus, externalities tend to cause markets to be inefficient.

Externalities Tend to Cause Markets to Be